Bingshan Refrigeration & Heat Transfer
Technologies Co., Ltd.
2021 Annual Report
April, 2022
Section 1 Important Notice, Table of Contents, and Definitions
The directors and the Board of Directors, the supervisors and theSupervisory Board, and Senior staff members of Bingshan Refrigeration &Heat Transfer Technologies Co., Ltd. (hereinafter referred to as theCompany) hereby confirm that there are not any important omissions,fictitious statements or serious misleading carried in this report, and shalltake all responsibilities, individual and/or joint, for the reality, accuracy andcompleteness of the whole contents.
Chairman of the Board of Directors of the Company Mr. Ji Zhijian,Financial Majordomo Mrs. Wang Jinxiu and the head of AccountingDepartment Mr. Li Sheng hereby confirm that the financial report of theannual report is true and complete.
All the directors have attended this Board meeting of the Company.
There is no significant risk having adverse influence on attainment of theCompany's future development strategy and business targets. Theparagraph " The prospect of the Company's future development " in Section3 of this Annual Report describes major risks the Company may beconfronted with, including the risk of Increasing market competition risk,the market promotion for new product and new technology slow, theAccounts receivable is on the high side and rising prices of raw materials.See the related sections for the countermeasures to be taken by the Company.
The profit distribution proposal reviewed and adopted at this Board meetingof the Company is: Based on the total capital stock of 843,212,507 shares, thedividend of RMB 0.1 in cash (including tax) will be distributed for every 10shares; The Company will not transfer the capital reserve to increase capitalstock.
This report is written respectively in Chinese and in English. In the event ofany discrepancy between the two above-mentioned versions, the Chineseversion shall prevail.
CONTENTS
Section 1 Important Notice, Table of Contents, and Definitions………………………………………………………………………...2
Section 2 About the Company and Main Financial Indicators ...... 6
Section 3 Management discussion and analysis ...... 10
Section 4 Corporate governance ...... 23
Section 5 Environmental and social responsibility ...... 33
Section 7 Change in Share Capital and Shareholders' Information ...... 38
Section 8 Information on Preferred Stock ...... 42
Section 9 Information on Corporate bonds ...... 43
Section 10 Financial Report ...... 44
Section 11 Reference Documents ...... 188
Reference Documents
1. The accounting statements bearing the signatures and seals of the legal representative, the financialmajordomo and the accountants in charge.
2. The original copies of all the Company's documents and the original copies of the bulletins published on thenewspapers designated by the China Securities Regulatory Commission in the report period.
3. Time for reference: from Monday to Friday 8:00 - 11:30 (am) 1:00 - 4:30 (pm)Liaison persons: Mr. Song Wenbao, Ms Du YuTel: 0086-411-87968130Fax: 0086-411-87968125
Definitions
| Defined item | Stands for | Meaning |
| Reporting period | Stands for | From Jan. 1, 2021 to Dec. 31 2021 |
| The Company, this Company | Stands for | Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. |
| Wuxin Refrigeration | Stands for | Wuhan New World Refrigeration Industry Co., Ltd., one of the subsidiaries of the Company where the Company holds 100% of its shares. |
| Bingshan Engineering Company | Stands for | Dalian Bingshan Group Engineering Co., Ltd., one of the subsidiaries of the Company where the Company holds 100% of its shares. |
| Bingshan Guardian | Stands for | Dalian Bingshan Guardian Automation Co., Ltd. one of the subsidiaries of the Company where the Company holds 100% of its shares. |
| Panasonic Compressor | Stands for |
Panasonic Appliances Compressor (Dalian) Co., Ltd. one of the associated companies of theCompany, where the Company holds 40% of its shares.
| Panasonic Cold-Chain | Stands for |
Panasonic Appliances Cold-Chain (Dalian) Co., Ltd. one of the associated companies of theCompany, where the Company holds 40% of its shares.
| Panasonic Refrigerating System | Stands for | Panasonic Appliances Refrigerating System (Dalian) Co., Ltd., one of the associated company of the Company, where the Company holds 20% of its shares |
| Fuji-Bingshan | Stands for | Dalian Fuji-Bingshan Vending Machine Co., Ltd., one of the associated companies of the Company, where the Company holds 49% of its shares. |
| Jingxue Insulation | Stands for | Jiangsu Jingxue Insulation Technology Co., Ltd., one of the associated companies of the Company, where the Company holds 21.91% of its shares. |
Section 2 About the Company and Main Financial Indicators
I. Company information
| Short form of the stock | Bingshan; Bingshan B |
| Stock code | 000530; 200530 |
| Listed stock exchange | Shenzhen Stock Exchange |
| Legal name in Chinese | 冰山冷热科技股份有限公司 |
| Legal name abbreviation in Chinese | 冰山冷热 |
| Legal English name | Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. |
| Legal English name abbreviation | Bingshan |
| Legal representative | Ji Zhijian |
| Registered address | No.106, Liaohe East Road, Dalian Economic and Technological Development Zone |
| Post code of Registered address | 116630 |
| Historical changes of the Company's registered address | Due to the overall relocation, the registered address of the Company was changed from 888 Southwest Road, Shahekou District, Dalian to 106 Liaohe East Road, Dalian Economic and Technological Development Zone in March 2017. |
| Office address | No.106, Liaohe East Road, Dalian Economic and Technological Development Zone |
| Post code of Office address | 116630 |
| Internet web site of the Company | www.bingshan.cn |
| E-mail of the Company | 000530@bingshan.com |
II. Contact persons and information
| Secretary of the Board of Directors | Authorized representative for securities affairs | |
| Name | Song Wenbao | Du Yu |
| Address | Bingshan Securities﹠Legal Affairs No.106, Liaohe East Road, Dalian Economic and Technological Development Zone | Bingshan Securities﹠Legal AffairsNo.106, Liaohe East Road, Dalian Economic and Technological Development Zone |
| Tel. | 0411-87968130 | 0411-87968822 |
| Fax | 0411-87968125 | 0411-87968125 |
| 000530@bingshan.com | 000530@bingshan.com |
III. Information disclosure and place of preparation for inquiry
| Name of the newspaper designated by the Company for information disclosure | China Securities Daily, Securities Times and Hong Kong Commercial Daily |
| Address of the website designated by China Securities Regulatory Commission for publishing this Annual Report | http://www.cninfo.com.cn |
| Place where this Annual Report was prepared for inquiry | Securities﹠Legal Affairs Department of the Company |
IV. Alteration to the registration
| Organization code | 912102002423613009 |
| Change in main business since the Company was listed | No change |
| Changes in the holding shareholder | No change |
V. Other related information
Accounting firm engaged by the Company
| Name of accounting firm | ShineWing CPAs (Special General Partnership) |
| Office location of accounting firm | 9/F,A Building No.,8 north street of Chao Yang Men, Dong Cheng District Beijing, China |
| Name of signing certified public accountant | Lin Li, Zhang Shizhuo |
Sponsor the Company appointed for performance of the consistent supervision duty in the reporting period
□ Applicable √ Not applicable
Financial consultant the Company appointed for performance of the consistent supervision duty in the reportingperiod
□ Applicable √ Not applicable
VI. Main accounting data and financial indicators
Did the Company retroactively adjust or restate the accounting data of previous years due to change in theaccounting policy and correction of accounting mistakes?
□ Applicable √ Not applicable
| 2021 | 2020 | Increase/decrease compared with previous year | 2019 | |
| Operating revenue | 2,089,208,256.22 | 1,727,267,935.15 | 20.95% | 1,831,851,280.70 |
| Net profit attributable to shareholders of listed companies | -269,059,849.96 | 21,341,133.39 | -1,360.76% | 89,112,113.43 |
| Net profit belonging to the shareholders of listed companies after the deduction of non-recurring profit and loss | -355,049,953.56 | 6,128,351.99 | -5,893.56% | 21,406,535.65 |
| Net cash flow from operating activities | 1,518,218.37 | -13,142,427.45 | 111.55% | 12,695,071.81 |
| Basic earnings per share | -0.319 | 0.025 | -1,376.00% | 0.106 |
| Diluted earnings per share | -0.319 | 0.025 | -1,376.00% | 0.106 |
| Weighted average return on net asset yield | -8.31% | 0.64% | Decrease 8.95 percentage points | 2.63% |
| 2021.12.31 | 2020.12.31 | Increase/decrease compared with previous year | 2019.12.31 | |
| Total assets | 5,735,570,604.67 | 5,681,568,328.36 | 0.95% | 5,525,503,256.26 |
| Owner's equity attributable to shareholders of listed companies | 3,002,842,837.47 | 3,375,609,788.07 | -11.04% | 3,379,565,029.89 |
The net profit attributable to the shareholders of the listed company suffered a significant loss, mainly due to thefollowing reasons: 1. Affected by the sharp rise in the price of raw materials and the intensification of marketcompetition, the gross profit margin decreased by 5.59 percentage points year-on-year; 2. Due to the increase oflong-term accounts receivable, the Company's provision for credit impairment loss increased according to theCompany's asset impairment provision policy; 3, in antithetical couplet enterprises, the joint venture hasimplemented new financial instruments standards since January 1, 2021, and the credit loss has been increasedconsiderably. Meanwhile, the price of the raw materials has been greatly increased and the impact of COVID-19on the new retail equipment leasing business has been greatly affected. The investment income of the joint venturehas dropped by 149.93 million yuan.
The lower of the Company’s net profit before and after deduction of non-recurring gains and losses in the most
recent three fiscal years are all negative, and the audit report in the last year shows that the Company's ability tocontinue operations is uncertain
□ Applicable √ Not applicable
The lower of the net profit before and after non-recurring gains and losses is negative
√ Applicable □ Not applicable
| Item | 2021 | 2020 | notes |
| Operating income (yuan) | 2,089,208,256.22 | 1,727,267,935.15 | |
| Amount deducted from operating income (yuan) | 62,109,983.70 | 59,331,578.30 | Income from sales of materials, rental of fixed assets and labor services other than normal operation. |
| Amount after deduction of operating income (yuan) | 2,027,098,272.52 | 1,667,936,356.85 |
VII.1.Difference of accounting data between as per Chinese accounting standards and as perInternational Accounting Standards
□ Applicable √ Not applicable
2. Difference of accounting data between as per Chinese accounting standards and as perForeign Accounting StandardsThe difference of accounting data between as per Chinese Accounting Standards and as per InternationalAccounting Standards was 0.
3.Explanation of reasons for differences in accounting data under domestic and foreignaccounting standards
√Applicable □Not applicable
The difference of accounting data between as per Chinese Accounting Standards and as per InternationalAccounting Standards was 0.VIII. The quarter main financial indicators
| the first quarter | the second quarter | the third quarter | the fourth quarter | |
| Operating revenue | 491,609,773.09 | 602,675,847.88 | 657,628,182.17 | 337,294,453.08 |
| Net profit attributable to shareholders of listed companies | -28,904,736.89 | 14,320,526.88 | -26,965,424.33 | -227,510,215.62 |
| Net profit belonging to the shareholders of listed companies after the deduction of non-recurring profit and loss | -16,049,142.03 | 4,166,467.42 | -39,026,942.89 | -304,140,336.06 |
| Net cash flow from operating activities | 17,535,066.89 | -46,422,903.17 | 33,753,508.29 | -3,347,453.64 |
IX. Non-recurring profits and losses and their amounts
| item | 2021 | 2020 | 2019 |
| Disposal gains and losses of non-current asset | 27,724,344.91 | -169,550.05 | 1,132,131.30 |
| Government subsidies included in current profit or loss | 15,993,001.31 | 17,952,461.57 | 3,707,100.00 |
| Debt restructuring gains and losses | 819,297.68 | 1,999,241.94 | |
| Disposal gains from investments on financial assets available for sale, and gains from fair value change of financial assets available for sale | 55,245,024.14 | 4,362,148.57 | 72,282,942.52 |
| Other non-operating revenue or expense | -5,129,941.48 | -4,643,229.90 | 481,549.43 |
| Others | 554,176.99 | ||
| Influence on income tax | 8,490,868.44 | 1,995,261.63 | 12,122,009.11 |
| Influence on minority shareholders | 170,754.52 | 293,787.16 | 329,555.29 |
| Total | 85,990,103.60 | 15,212,781.40 | 67,705,577.78 |
Based on the changes in the controlling shareholders of Thermoking Container Temperature Control (Suzhou) Co.,
Ltd. ("Suzhou Thermoking "), as well as the trend of business growth and profit improvement, the Companyadopted the price to book ratio method of comparable companies and considered the liquidity discount to measurethe fair value of Suzhou Thermoking in 2021. The income from changes in fair value was 47,971,962.90 yuan.
Section 3 Management discussion and analysis
I. The industry situation of the Company during the reporting period
1. Industry development trend
In recent years, the influence of refrigeration and air conditioning industry in China's national economy is growing,conferring increasing influence upon consumption upgrade, food safety and livelihood improvement. Besides,development model under high-end, intelligent, green and service is experiencing rapid growth. The field ofcompetition, competitors, products, connotation is constantly changing.In 2021, the refrigeration and air-conditioning industry was facing a complex and severe market situation at homeand abroad. The problems of intensified market competition, increased cost pressure, and difficulty in improvingefficiency continued to plague the operation and development of the industry.In 2022, the industry will continue to differentiate, competition will continue to intensify, difficulties andopportunities coexist. Actively respond to the national "double carbon" strategy, the transformation and upgradingof major enterprises in the industry will be further accelerated. Intelligent manufacturing, green manufacturingand service-oriented manufacturing will become increasingly prominent, and the pace of high-qualitydevelopment will be more robust.
2. Challenges and opportunities faced by the Company
(1)Opportunities faced by the Company
Energy conservation, carbon reduction and improving energy efficiency have become the consensus of the wholesociety; Overall promotion of the national "double carbon" strategy; The carbon trading market was officiallylaunched and gradually expanded; Regional energy system and comprehensive energy utilization are encouragedand supported by the state; The 14th five year plan for the development of cold chain logistics has been issued,and the market demand for cold chain equipment is expected to grow rapidly; With the promulgation of the newcold storage design standard, the use opportunities of ammonia refrigerant have increased.With the strong technology bases, innovative business model, and system advantages, the Company is capable ofcapturing the above opportunities in a good position.
(2)Challenges faced by the Company
The production license system is cancelled, and the traditional market competition is intensified; the cultivation ofenergy conservation and emission reduction market still needs time; the transformation and upgrading process iscomplex, and there may be significant risk factors that have not been identified.
3. Development planning of the Company
The Company will focus on the refrigeration and heating industries under the operation policy of innovation andvalue creation, promote business integration with the parent company and subsidiaries as the core business,integrate internal and external resources, upgrade the industrial chain, innovate business model, strengthentechnological innovation, improve and expand the business scale and development space, improve employees’benefits and realize sustained, healthy and harmonious development, thus to become an enterprise trusted andrespected by customers, partners and the society.
4. Capital requirement and fund sourcing plan
In 2022, the capital expected to be required for the Company's production operation and capital operation will befinanced by its own funds and appropriate financing.II. The Company’s Main business during the reporting period
Focusing on the hot and cold industry, the Company is committed to the development of industrial refrigerationand heating business, commercial refrigeration business, air conditioning and environment business, engineeringand service business and new business fields, covering the key areas of the hot and cold industry chain andcreating a complete hot and cold industry chain.
The Company's main products include piston and screw refrigeration compressors, pressure vessels, combinedwarehouses, controlled atmosphere storage, quick freezer, ice maker, flake ice maker, granulator, etc., which areused in national defense, scientific research, petroleum, chemical, textile, medicine, power generation, agriculture,animal husbandry, fishery and catering service industries. The Company's product sales and comprehensivesolutions provide both domestic and international markets, with self-supporting sales as the main and channelsales as the auxiliary.During the reporting period, rigid demands such as food safety, consumption upgrading, energy conservation andcarbon reduction will benefit the refrigeration and air conditioning industry. At the same time, the refrigerationand air conditioning industry is also facing the problems of intensified market competition, increased cost pressure,and difficulty in improving efficiency. Facing the opportunities and challenges, focusing on the hot and coldindustry, the Company strengthened and optimized the professional work department, continued to deeplycultivate the advantageous market segments such as cold chain logistics, petrochemical industry, beer and dairyproducts, meat slaughtering, ship refrigeration, ice and snow venues and polysilicon, vigorously expanded CCUS,ORC, photovoltaic and other new undertakings, and actively expanded and occupied the domestic market.
1. Industrial refrigeration and heating business
Industrial refrigeration is an important field reflecting the core technology of the Company. After years ofdevelopment, the Company has been close to the technical level of the main international competitors in the fieldof industrial refrigeration, and has achieved catching up in some fields. Based on the traditional refrigeration, theCompany realizes the balance of cold and heat through the utilization of heat, which greatly improves the energyutilization rate.During the reporting period, the Company's "industrial and commercial open screw refrigeration unit andrefrigeration system" was selected as the Sixth Batch of manufacturing single champion products of the Ministryof industry and information technology.
2. Commercial refrigeration business
Commercial refrigeration is the Company's core business. In China, the Company takes the lead in opening up thegreen intelligent cold chain from the first kilometer of the field to the last 100 meters of the residential community,which is the competitive advantage of the Company.Focusing on food refrigeration, the Company has patented products pre-cooling from the field, all kinds of quickfreezing equipment and refrigeration facilities of various specifications, and China's leading experience in thedesign and installation of large-scale ammonia and carbon dioxide refrigerators. On the basis of absorbing therelevant experience of Japan, Europe and the United States, combined with China's new needs, to provide newerproducts, better solutions and fresher experience for the field of food freezing and refrigeration.
3. Air conditioning and environment business
In recent years, relying on the complete industrial chain, the Company has continuously carried out transformationand upgrading in the field of air conditioning and environment, developed more energy-saving and environmentalprotection products around the blue sky project, and accelerated the transformation and upgrading from airtreatment to environmental governance.At present, the Company has developed a series of innovative products around the market segments ofcommercial air conditioning, central air conditioning and special air conditioning, and provides correspondingsolutions in different segments around these innovative products. For hospitals, electronic factories, high-end realestate, rail transit and other fields, provide targeted solutions.During the reporting period, in order to strengthen the special air conditioning business, the Company transferred30% equity of Dalian Bingshan air conditioning equipment Co., Ltd. held by Showa Iron Industry Co., Ltd. Afterthis equity transfer, the Company held 100% equity of Dalian Bingshan air conditioning equipment Co., Ltd.
4. Engineering and service business
Cold and hot engineering and service are the Company's advantageous business fields. In recent years, theCompany has realized transformation and upgrading from the manufacturer of cold and hot equipment to theservice provider of comprehensive solution of cold and hot through the development of engineering and serviceindustry, and realized the dual wheel drive of the enterprise, and provided more professional and accurate servicesto each segment market, and constantly created new value for customers and realized common growth.At present, the Company focuses on petrochemical technology, refrigeration, central air conditioning, ice andsnow engineering, artificial environment and other market segments. Relying on the enterprise's industrial chain,value chain and ecosystem, the Company provides services from consulting, planning, design to manufacturing,installation, commissioning and service in the whole process and life cycle. At the same time, according to theneeds of customers, promote the combination of industry and finance, and provide services for customers throughthe form of project general contracting and financial leasing.
5. New business
With the deepening of China's economic transformation and upgrading, as well as the continuous introduction ofenvironmental governance policies, the domestic industrial energy conservation and environmental protectionindustry is growing rapidly, the level of energy conservation and consumption reduction of enterprises and thecomprehensive utilization of resources is constantly improving, and the energy industrial structure has changed.Strengthening the optimal utilization of energy has become a development trend. For low-grade energy recycling,the Company provides customers with a series of energy-saving, environmental protection, efficient new products,in line with the national strategic requirements of energy conservation, carbon reduction and sustainabledevelopment, and contributes professional wisdom to the national carbon peak and carbon neutral strategy.During the reporting period, the Company made good progress in CCUS, ORC, photovoltaic and other newundertakings.
III. Analysis of core competenceThe Company focuses on main business of refrigeration and heating; independent R&D and jointventure partnerships are cooperate with each other effectively; capital resources integration andbusiness model innovation are in a positive interaction; the community of business and interest arebeing multi-storey created; the develop mode with Bingshan characteristic are formed.The Company has the integrated refrigeration and heating industrial chain for offering kinds ofcomprehensive solution services, including design, manufacture, installation and maintenance etc.,and can satisfy individual requirements preferably.The Company possesses a mature and solid marketing networks and after-sale service networkon/off-line, and can offer high quality and high value-added services more initiative and faster forclients from around the city.After overall relocation reform, the new factory of intelligence, environment protection, highefficiency and safety are put into used, which produces a strong advantage for creating higher valueto the customers.While move forward with transformation and upgrading for former business, the Company willimplement the cultivation for new kinetic energy, thus the sustainable healthy development willcome more and more feasible.During the reporting period, the Company adhered to innovation, took the initiative to change,solidly improved its technical power, marketing power, product power, engineering power andservice power, and further improved its core competitiveness.IV. Analysis of main business
1. summarize
In 2021, the Company further focused on refrigeration and heating industries, deeply cultivated marketsegments, focused on the improvement of main business and the cultivation of new drivers, continued toimprove innovation, improved quality and efficiency, and solidly enhanced its core competitiveness.In 2021, the Company achieved an operating revenue of 2,089.21 million yuan, a year-on-year increase of
20.95%; The net profit attributable to the shareholders of the listed company was -269.06 million yuan,resulting in a significant loss. The main reasons are as follows: first, affected by the sharp rise in the price ofraw materials and the intensification of market competition, the Company's gross profit margin decreased by
5.59 percentage points year-on-year; Second, due to the increase of long-term accounts receivable, theCompany's provision for credit impairment loss increased according to the Company's asset impairmentprovision policy; Three, in antithetical couplet enterprises, the joint venture's implementation of the newfinancial instruments standard since January 1, 2021, the increase in the credit loss increase and theunfavorable impact of COVID-19's impact on the new retail equipment leasing business, the investmentincome of the joint venture enterprises has dropped by about 149.93 million yuan.During the reporting period, the Company adhered to integrity, innovation and initiative. The construction of
corporate culture has been carried out in a pragmatic manner, unified ideas, woven dreams, and many coretechnicians have returned. Strengthen the organization and vigorously promote the implementation ofmarket-centered integrated operation through organizational restructuring and business process reengineering.The improvement of engineering power and manufacturing power were implemented in an orderly manner,the orders increased significantly year-on-year, and the operating cash flow improved significantly. TheCompany's "industrial and commercial open screw refrigeration unit and refrigeration system" was selectedas the Sixth Batch of manufacturing single champion products of the Ministry of industry and informationtechnology. The red water pre-cooling device of the Company was selected as the "innovative product of2021 China Refrigeration Exhibition" and the "specialized and special new" product of Liaoning Province in2021.During the reporting period, Bingshan Engineering company, a subsidiary of the Company, optimized andstrengthened the professional work department and specialized deep cultivation of advantageous marketsegments. Won the bid for the central kitchen project of Xinjiang production and Construction Corps (thecontract amount is about 340 million yuan), which is the largest single project contract in the Company'shistory; Won the bid for the Shanghai Star indoor comprehensive ice and snow venue project (the contractamount is about 130 million yuan), which is the largest ice and snow integration contract in China at present;The market share of polysilicon jumped sharply, with a total contract amount of about 210 million yuan; CO
projects erupted intensively and their influence increased rapidly; The CCUS project was implemented forthe second time, and the carbon neutralization solution was successfully expanded.During the reporting period, Wuhan New World Refrigeration, a subsidiary of the Company, furtherimplemented product and solution optimization in combination with the national strategy of "carbon peakand carbon neutralization". The commissioning and operation of the demonstration project of pressureenergy recovery and comprehensive utilization of cold energy in Wuhan Sanjintan natural gas pipelinenetwork was successful. The project with the largest installed power of single machine of ORC screwexpansion generator set - silbon petrochemical waste heat power generation project was successfullyundertaken. Marine screw expansion generator set was selected as "innovative products of 2021 ChinaRefrigeration Exhibition".During the reporting period, Bingshan Guardian, a subsidiary of the Company, focused on energy-savingcontrol of cooling and heating system and strengthened technological innovation. Selected as the"specialized and new" small giant enterprise in Liaoning Province in 2021. Scc60 console was selected as the"specialized and special new" product of Liaoning Province in 2021. The research and application project ofedge intelligent equipment for real-time monitoring of distributed large-scale refrigeration equipment basedon 5G was selected as the first batch of science and technology research projects in Dalian in 2021.
2. Sales income and costs
(1) Sales income structure
| 2021 | 2020 | Year-on-year increase/decrease | |||
| Amount | Proportion to the Sales costs | Amount | Proportion to the Sales costs | ||
| Total sales income | 2,089,208,256.22 | 1,727,267,935.15 | 100% | 20.95% | |
| By industry | |||||
| Refrigeration and air-conditioning equipment | 2,031,958,305.49 | 97.26% | 1,680,314,480.42 | 97.28% | 20.93% |
| Others | 57,249,950.73 | 2.74% | 46,953,454.73 | 2.72% | 21.93% |
| By product | |||||
| Industrial product | 1,328,371,290.81 | 63.58% | 1,347,335,824.84 | 78.00% | -1.41% |
| Installation works | 652,866,257.62 | 31.25% | 321,545,409.42 | 18.62% | 103.04% |
| Others | 107,970,707.79 | 5.17% | 58,386,700.89 | 3.38% | 343.63% |
| By region | |||||
| Domestic sales | 1,994,087,984.59 | 95.45% | 1,635,465,100.98 | 95.45% | 21.93% |
| Foreign sales | 95,120,271.63 | 4.55% | 91,802,834.17 | 4.55% | 3.61% |
| By sales model | |||||
| Total | 2,089,208,256.22 | 100.00% | 1,727,267,935.15 | 100.00% | 20.95% |
(2) Main business structure
| Operating revenue | Operating costs | Gross profit | Increase/decrease of operating revenues on a year-on-year basis | Increase/decrease of operating costs on a year-on-year basis | Increase/decrease of gross profit on a year-on-year basis | |
| By industry | ||||||
| Refrigeration and air-conditioning | 2,031,958,305.49 | 1,808,263,206.67 | 11.01% | 20.93% | 29.03% | Decrease 5.59 percentage points |
| By product | ||||||
| Industrial product | 1,328,371,290.81 | 1,137,346,738.60 | 14.38% | -1.41% | 3.37% | Decrease 3.96 percentage points |
| Installation works | 652,866,257.62 | 632,692,690.26 | 3.09% | 103.04% | 116.08% | Decrease 5.85 percentage points |
| Others | 50,720,757.06 | 38,223,777.81 | 24.64% | 343.63% | 358.60% | Decrease 2.46 percentage points |
| By region | ||||||
| Domestic sales | 1,936,838,033.86 | 1,729,446,885.07 | 10.71% | 21.93% | 0.30 | Decrease 5.61 percentage |
| Foreign sales | 95,120,271.63 | 78,816,321.60 | 17.14% | 3.61% | 0.10 | Decrease 4.86 percentage |
| By sales model | ||||||
| Total | 2,031,958,305.49 | 1,808,263,206.67 | 11.01% | 20.93% | 29.03% | Decrease 5.59 percentage points |
（3）Was the Company's sales income on material objects more than that on labor service?
√ Yes □ No
| Industry category | Item | 2021 | 2020 | Year-on-year increase/decrease |
| Main refrigeration unit for industrial or commercial use | Sales volume | 1,921 | 1,911 | 0.52% |
| Production output | 1,918 | 1,916 | 0.10% | |
| Inventory level | 383 | 386 | -0.78% |
Reason for change in the related data by 30% or higher on a year-on-year basis
□ Applicable √ Not applicable
（4）Performance of major sales contracts and major procurement contracts signed by the company up tothe reporting period
□ Applicable √ Not applicable
（5）Sales cost structure
| Industry category | Item | 2021 | 2020 | Year-on-year increase/decrease | ||
| Amount | Proportion to the operating costs | Amount | Proportion to the operating costs | |||
| Refrigeration and air-conditioning | Direct materials | 1,549,104,567.26 | 83.76% | 1,190,876,714.73 | 83.13% | 30.08% |
| Labor wages | 182,511,399.62 | 9.87% | 136,954,335.52 | 9.56% | 33.26% | |
| Depreciation | 35,318,984.53 | 1.91% | 41,327,601.39 | 2.88% | -14.54% | |
| Utilities | 18,771,030.25 | 1.01% | 16,693,515.58 | 1.17% | 12.45% | |
| Others | 63,825,290.62 | 3.45% | 46,671,942.69 | 3.26% | 36.75% | |
| Total operating costs | 1,849,531,272.29 | 100.00% | 1,432,524,109.91 | 100.00% | 29.11% | |
(6) Was the Company's consolidated range change during the reporting period?
□ Applicable √Not applicable
(7) Major change or adjustment in the Company's products or service in the reporting period
□ Applicable √ Not applicable
(8) Information on the Company's major customers and major suppliers
Information on the Company's major customers
| Total sales volume from top five customers (yuan) | 432,519,530.82 |
| Proportion of the total sales volume from top five customers to the annual sales volume | 20.70% |
| Proportion of the related party total sales volume from top five customers to the annual sales volume | 8.72% |
Information on the Company's top five customers
| No. | Name of customer | Sales volume (yuan) | Proportion to the annual sales volume |
| 1 | Panasonic Cold-chain (Dalian) Co., Ltd. | 127,490,433.60 | 6.10% |
| 2 | State Grid Integrated Energy Service Group Co., Ltd. | 108,357,798.18 | 5.19% |
| 3 | Xinjiang Silk Road Tianshan International Food City Investment Co., Ltd. | 88,318,144.83 | 4.23% |
| 4 | BAC Dalian Co., Ltd. | 54,676,218.06 | 2.62% |
| 5 | Qingdao Fuji Farm Food Co., Ltd. | 53,676,936.15 | 2.57% |
| Total | —— | 432,519,530.82 | 20.70% |
Among the top five customers mentioned above, Panasonic cold chain (Dalian) Co., Ltd. and BAC Dalian Co.,Ltd. are related to the Company.
Information on the Company's major suppliers
| Total purchase volume from top five suppliers (yuan) | 350,270,525.77 |
| Proportion of the total purchase volume from top five suppliers to the annual purchases volume | 17.36% |
| Proportion of the related party total purchase volume from top five suppliers to the annual purchases volume | 2.19% |
Information on the Company's top five suppliers
| No. | Name of supplier | Purchase volume (yuan) | Proportion to the annual purchase volume |
| 1 | Shenyang Bao Gang Northeast Trade Co., Ltd. | 159,141,244.93 | 7.89% |
| 2 | Longkou Longpeng Precision Copper Pipe Co. Ltd. | 62,806,544.12 | 3.11% |
| 3 | Dalian Weijie Refrigeration and Air Conditioning Installation Co., Ltd. | 49,618,076.99 | 2.46% |
| 4 | Dalian Big ICER Refrigeration Equipment Co., Ltd. | 44,236,639.71 | 2.19% |
| 5 | Weilian Heat Transfer Technology (Shanghai) Co., Ltd. | 34,468,020.02 | 1.71% |
| Total | —— | 350,270,525.77 | 17.36% |
Among the top five suppliers mentioned above, Dalian Big ICER Refrigeration Equipment Co., Ltd. had anassociated relationship with the Company during the reporting period.
3. Expenses
| 2021 | 2020 | Increase/decrease of gross profit on a year-on-year basis | Explain for major changes | |
| Selling expenses | 130,633,909.30 | 83,740,476.90 | 56.00% | Adjustment of personnel organizational structure and increase of performance appraisal salary of business personnel |
| Administrative | 170,613,436.15 | 160,295,370.53 | 6.44% |
| expenses | ||||
| Financial expenses | 13,941,926.23 | 26,479,309.37 | -47.35% | The decrease of bank borrowings leads to a corresponding decrease in interest costs; Decrease in exchange losses |
| R&D expenses | 65,269,765.23 | 49,158,256.78 | 32.77% | With the increase of operating revenue, R & D expenses increase accordingly |
4. R&D expenditure
During the reporting period, the Company focused on the deep enthalpy energy system solutions, focused on thekey market segments in the wide temperature zone, and actively promoted the research and development, trialproduction and optimization of new products.Information on R&D expenditure
| 2021 | 2020 | Increase/decrease on a year-on-year basis | |
| The quantity of the person engaged in R&D | 304 | 268 | 13.43% |
| The quantity proportion of the person engaged in R&D | 17.53% | 10.77% | 6.76% |
| The spending amount on R&D（yuan） | 65,269,765.23 | 57,382,896.29 | 13.74% |
| R&D spending accounts for the proportion of revenue | 3.12% | 3.32% | Decrease 0.20 percentage points |
| The amount of R&D investment capitalization（yuan） | 0.00 | 0.00 | 0.00% |
| Capitalize R&D investment for the proportion of R&D spending | 0.00% | 0.00% | 0.00% |
Reasons for the remarkable change in R&D spending accounts for the proportion of revenue compared with theprevious year
□ Applicable √ Not applicable
Reasons for the substantial changes in the capitalization rate of R&D investment and its rationality
□ Applicable √ Not applicable
5. Cash flows
| Item | 2021 | 2020 | Year-on-year increase/decrease |
| Sub-total of cash inflows from operating activities | 2,084,554,545.45 | 1,639,373,926.67 | 27.16% |
| Sub-total of cash outflows from operating activities | 2,083,036,327.08 | 1,652,516,354.12 | 26.05% |
| Net amount of cash flow generated in operating activities | 1,518,218.37 | -13,142,427.45 | 111.55% |
| Sub-total of cash inflows from investing activities | 324,356,502.38 | 184,194,481.36 | 76.09% |
| Sub-total of cash outflows from investing activities | 76,095,331.84 | 14,869,095.73 | 411.77% |
| Net amount of cash flow generated in investing activities | 248,261,170.54 | 169,325,385.63 | 46.62% |
| Sub-total of cash inflows from financing activities | 347,516,847.94 | 390,021,419.37 | -10.90% |
| Sub-total of cash outflows from financing activities | 473,406,304.78 | 531,151,803.02 | -10.87% |
| Net amount of cash flow generated in financing activities | -125,889,456.84 | -141,130,383.65 | 10.80% |
| Net increase in cash and cash equivalents | 123,990,877.38 | 13,451,105.93 | 821.79% |
Reason for change in the related data by 30% or higher on a year-on-year basis
√ Applicable □ Not applicable
1. Net cash flow arising from operation activities have a significant increase on a y-o-y basis, mainly due to theincrease in cash received from the sale of goods and the provision of labor services.
2. Net cash flow arising from investing activities have a significant increase on a y-o-y basis, mainly because theCompany received the price of equity transfer of Panasonic Refrigeration (Dalian) Co., Ltd. during the reportingperiod.
Reason for remarkable difference between the cash flows from the Company's operating activities in the reportingperiod and the net annual profit.
√ Applicable □ Not applicable
There was a remarkable difference between the net amount of cash flow generated in operating activities of theCompany and the net annual profit in the reporting period, mainly due to that the proportion of returns oninvestment to the total profit of the Company was higher.V. Analysis of the non-main businessDuring the reporting period, Panasonic compressor, an associate of the Company, grew steadily with variablestrain. Market development has been steadily promoted, and the market share of leading products has increasedfor two consecutive years. The research and development of 25HP high horsepower scroll compressor has beencompleted and mass production has been realized; CO
rotor compressor has been successfully applied to the newgeneration of hydrogen fuel hybrid locomotive of CRRC; CO
compressor officially landed in the Europeanvending machine market.During the reporting period, Panasonic cold chain, an associate of the Company, continued to cultivateadvantageous markets. The cooperation between Master Kang, Yuanqi forest and other beverage manufacturerswas further expanded, and the beverage freezer market received large orders again. Actively respond to thepersonalized needs of key customers such as meituan optimization and miyue ice city, and the commercial cabinetbusiness has achieved good growth. 45 mainstream best-selling products won the "leader" certificate of enterprisestandard in 2021.During the reporting period, the Company's associated company, Panasonic Refrigerator System further improvedits engineering and manufacturing capabilities. It won the bid for four large-scale vaccine cold storage projects,including Beijing Yizhuang pharmaceutical cold storage project and Sinopharm China biological Wuhan Xinguanvaccine storage project. Luoyang Dazhang Food Industrial Park, the largest EPC project till now, lasted nearly twoyears, has been successfully accepted. The newly developed 40HP high horsepower semi closed pistoncompressor was officially launched.During the reporting period, Fuji Bingshan, an associate of the Company, continued to promote the strengtheningof leading products and the optimization of marketing mode. Focus on beverage machines, coffee machines,integrated machines and other leading products, expand the development of brand marketing, and promote specialmarketing.During the reporting period, Jingxue Energy Saving, an associated company of the Company, successfullyobtained the approval of China Securities Regulatory Commission for registration and was listed on the growthenterprise market of Shenzhen Stock Exchange on June 18, 2021. The future development will be assisted by thecapital market.VI. Analysis of assets & liabilities
1. Remarkable change in assets
Monetary unit: RMB yuan
| 2021.12.31 | 2020.12.31 | Proportion increase/decrease | Explain for major changes | |||
| Amount | Proportion to the total assets | Amount | Proportion to the total assets | |||
| Monetary funds | 522,658,505.79 | 9.11% | 373,445,731.67 | 6.57% | 2.54% | Mainly because the Company received the equity transfer price of Panasonic Refrigeration |
| Accounts receivable | 821,548,678.85 | 14.32% | 817,011,955.75 | 14.38% | -0.06% | |
| Contract assets | 109,859,658.79 | 1.92% | 91,430,011.60 | 1.61% | 0.31% | |
| Inventories | 1,014,527,127.82 | 17.69% | 731,658,797.98 | 12.88% | 4.81% | mainly because the company's unfinished |
| construction projects increased in the current period, according to the requirements of the new income standards, income cannot be recognized income. | ||||||
| Investment property | 120,752,809.61 | 2.11% | 126,288,477.92 | 2.22% | -0.11% | |
| Long-term equity investment | 1,231,504,533.45 | 21.47% | 1,597,241,363.62 | 28.11% | -6.64% | mainly due to the transfer of 40% equity of Panasonic refrigeration held by the company and the decline of the company's investment income in associated enterprises |
| Fixed assets | 855,395,405.85 | 14.91% | 866,198,856.04 | 15.25% | -0.34% | |
| Construction in progress | 38,974,478.45 | 0.68% | 34,254,599.42 | 0.60% | 0.08% | |
| Short-term loans | 23,934,703.37 | 0.42% | 27,449,505.03 | 0.48% | -0.06% | |
| Contract liabilities | 245,937,091.72 | 4.29% | 282,971,600.00 | 4.98% | -0.69% | Orders increased, and advances from customers increased |
| Long-term loans | 499,719,963.40 | 8.71% | 295,100,657.10 | 5.19% | 3.52% | |
| Lease liabilities | 150,000,000.00 | 2.62% | 160,000,000.00 | 2.82% | -0.20% | |
| 5,394,021.14 | 0.09% | 13,818,476.46 | 0.24% | -0.15% |
2. Assets & liabilities which are measured by fair value
√ Applicable □ Not applicable
Other non-current financial asset measured in fair value is 239,304,098.83 yuan at the year beginning，and261,410,664.61 yuan at the year end, with a selling amount of 30,292,000.00yuan.
3. Restrictions on asset rights as of the end of the reporting period
By the end of reporting period, the Company’s asset rights was limited, including monetary funds 83,689,167.92yuan, the reason for the limitation is the deposit and the bank account were frozen; notes receivable 6,420,000.00yuan, the reason for the limitation is bank pledge.VII. Analysis of investments
1.The overall situation
√ Applicable □ Not applicable
| Investment in 2021(yuan) | Investment in 2020(yuan) | Amount of variation |
| 1,231,504,533.45 | 1,597,241,363.62 | -18.38% |
2.The significant equity investment during the reporting period
□Applicable √Not applicable
3 The significant non-equity investment during the reporting period
□Applicable √Not applicable
4.The financial asset investment
(1) The securities investment
√ Applicable □ Not applicable
| Stock code | Stock abbreviation | Initial investment cost | Accounting measurement model | Book value at the beginning | Changes in the profit and loss of the fair value in this period | Accumulative change of fair value credited to equity | Current sale amount | Report period profit and loss | Book value in the ending | Accounting subjects | Source of funds |
| 601211 | Guotai Jun’an | 11,210,008.00 | fair value measurement | 196,511,440.24 | 4,426,602.88 | 4,426,602.88 | 32,812,417.98 | 11,656,207.36 | 200,547,043.12 | Other Non-current financial assets | Own funds |
| total | 11,210,008.00 | -- | 196,511,440.24 | 4,426,602.88 | 4,426,602.88 | 32,812,417.98 | 11,656,207.36 | 200,547,043.12 | -- | ||
Until 31 December, 2021, the Company held 11,210,008 numbers of shares of Guotai Jun’an Securities Co., Ltd. ,including 1,710,000 shares under refinancing and lending. The Company sold 1,700,000 numbers of shares ofGuotai Jun’an, and received cash dividend RMB 7,229,604.48 Yuan during the reporting period.
(2) Derivative investment
□Applicable √ Not applicable
During the reporting period, the Company does not exist derivative investment.
5. The use of funds raised
□Applicable √ Not applicable
VIII. The material assets and equity sale
1. The material assets sale
□Applicable √Not applicable
2. The material equity sale
√Applicable □Not applicable
| Counterparty | Sold equity | Sale date | Transaction price (ten thousand yuan) | The net profit contributed by the equity to the listed company from the beginning of the current period to the date of sale(ten thousand yuan) | The impact of the sale on the Company | The percentage of the net profit contributed by the equity sale to the total net profit of the listed company | Principles of Equity Sale Pricing | Related transaction or not | Relationship with the counterparty | The equity involved has all been transferred or not | Implemented as planned or not | Disclosure date | Disclosure Index |
| Panasonic Corporation of China | The Company holds 40 percent equity of Panasonic Refrigeration (Dalian) Co., Ltd. | December 13, 2021 | 17,493.52 | -1,499 | This equity transfer will help the Company to properly revitalize long-term equity investment, optimize the asset structure and help improve the main business. The equity transfer received funds, the Company will be used to supplement working capital or repay bank loans, reduce financial costs. | 10.28% | According to the asset - based method to determine the transfer price of the underlying equity.. | Yes | Among the directors and supervisors of Bingshan Group, the controlling shareholder of the company, panasonic China directors serve as part of the directors and supervisors. Panasonic China is the affiliated legal person of the company. | Yes | Yes | December 13, 2021 | http://www.cninfo.com.cn/ |
IX. Analysis of major subsidiary companies and mutual shareholding companies
√ Applicable □ Not applicable
Unit: ten thousand yuan (except for registered capital)
| Company name | Type | The main business | registered capital | total assets | net assets | ||
| Fuji Bingshan | mutual shareholding company | Vending machine development, manufacturing, sales, installation, maintenance and related consulting and after-sales service | JPY 4,000 million | 75,381 | 37,567 | 23,978 | 28 |
| Panasonic Cold-Chain | mutual shareholding company | Commercial Refrigeration Equipment, Refrigeration Storage, Stainless Steel Kitchen Equipment and Electrical Appliances | JPY 4,650 million | 187,260 | 21,472 | 151,325 | -28,215 |
| Panasonic Compressor | mutual shareholding company | Scroll Compressor | JPY 6,200 million | 158,506 | 115,685 | 111,704 | 8,370 |
| Jingxue Insulation | mutual shareholding company | New building energy-saving board, refrigerated storage door | RMB 101,000 thousand | 152,402 | 78,402 | 91,402 | 6,710 |
| Bingshan Metal | mutual shareholding company | High-grade building hardware, plumbing equipment | USD 18,064.5 thousand | 36,998 | 30,413 | 46,791 | 4,849 |
Subsidiary companies obtained or disposed in the reporting period
□Applicable √Not applicable
X. The structured corporate bodies which the Company controlled
□Applicable √Not applicable
XI. Development prospect of the CompanyMajor risks faced and countermeasures adopted by the Company
(1)Increasing market competition risk
Countermeasures: focus on the hot and cold industry, deeply cultivate the advantage market segmentation; rapidlyimprove the engineering and manufacturing power; orderly improve the level of intelligent manufacturing andservice-oriented manufacturing; speed up the transformation and upgrading of inherent undertakings; acceleratethe implementation of new kinetic energy cultivation; continue to build Bingshan enterprise and interestcommunity.
(2)Risk of slow marketing of new products and technologies
Countermeasures: create differentiated competitiveness of new products and technologies; strengthen thetechnology marketing and service marketing, and cultivate the market segmentation professionally; appropriateuse of financial leasing, contract energy management and other innovative models.
(3)Risk of high level of trade receivables
Countermeasures: strictly implement the project management system and further strengthen the management ofaccounts receivable; enhance quality of contract through intensified customer credit assessment and contractappraisal; effective control of increase in trade receivables by reduction of guarantee deposits, and taking bankcredit instruments as guarantee deposits; improve contract execution through stricter review on goods delivery,intensified control on project construction and acceptance, and post-sale service; prepare special compositionsolutions and incentive policy to accelerate settlement of trade receivables with relatively long aging.
(4)Risk of rising raw material prices
Countermeasures: the Company will actively respond to cost pressure by reducing material rates, centralizedprocurement, expanding sales, adjusting selling prices, reducing expenses and other measures.
In 2022, the Company will focus on the refrigeration and heating industry, continue to cultivate the advantageousmarket segments such as cold chain logistics, petrochemical industry, beer and dairy products, meat slaughtering,ship refrigeration, ice and snow venues and polysilicon, vigorously expand new businesses such as CCUS, ORCand photovoltaic, solidly improve the five core competitiveness of marketing, technology, products, engineeringand services, and accelerate the improvement of its main business.In 2022, the main business strategies are as follows:
(1) Marketing strengthening. Aiming at the product business, stabilize the traditional field, improve the marketshare, and continue to lead the polysilicon segment market. For the engineering business, improve the orderquality of complete sets of projects and improve the self product ratio of engineering projects. For the energyindustry, take the carbon neutralization solution as the main development path to expand the markets of CCUS,natural gas liquefaction, new energy and so on.
(2) Technology enhancement. With green refrigerant and zero carbon as the center and market segmentationapplication as the goal, improve technology, implement application and help sales. Promote the standardization ofstandard spectrum and sub modularization, and realize the standardization, serialization and modularization ofproducts.
(3) Improvement of engineering power. Strengthen project management, fully implement the project budget,control the whole process of operation, ensure profits and prevent risks. Optimize the work flow and promote thestandardization of safe and civilized construction and construction management. Refine the performance appraisalto ensure the project duration and acceptance.
(4) Improvement of manufacturing power. By integrating engineering procurement and product procurementbusiness, optimize supply chain management and improve production assurance rate and sales satisfaction rate.By improving the refining process, adding intelligent equipment and tools, and adding batch production lines,ensure product quality and improve production capacity and production efficiency. Reduce the market defect ratethrough measures such as quality team optimization, supplier management and control strengthening and processmanagement and control refinement.The above-mentioned business plan does not represent the earnings forecast of listed companies for the year of2022. Whether it can be achieved depends on the changes of market conditions and the efforts of managementteams and other factors. There are great uncertainties. Investors should pay special attention to it.XII. Record of investigation, communication, and other activities in the reporting period
□Applicable √Not applicable
Section 4 Corporate governance
I. Basic situation of corporate governance
Within the reporting period, the Company centered around the operation subject as “Leading innovation, Creatingvalue” with the theme " integrity, innovation and return of the king"”, relying on the opportunity of overallrelocation and transformation of the Company, to further deepen and perfect the normative internal control systemand upgrade the governing level of the Company continuously.
There were no problems with the Company concerning horizontal competition caused by restructures and otherreasons. The main normal associated transactions between the Company and the associated companies includedpurchasing the supporting products for package projects from the associated companies, and selling the supportingparts and components to the associated companies and providing them with the labor service. Associatedtransactions between the Company and the associated companies are necessary for normal production andoperation and helpful for the Company’s healthy development, and therefore will continue. The Company willstrictly follow the related decision-making procedures and fulfill the obligation in information disclosure in orderto further regulate associated transactions.Was there any deviation of the Company's corporate governance from the requirements in the Company Law andChina Securities Regulatory Commission's regulations?
□ Yes √ No
There was no deviation of the Company's corporate governance from the requirements in the Company Law andChina Securities Regulatory Commission's regulations.
II. Status of the Company's business, staff, asset, organization and finance separations fromthe holding shareholder
The Company was separated from the holding shareholder in business, staff, asset, organization and finance, andhas the independent and complete business and operation capability.
III. Horizontal competitions
□ Applicable √ Not applicable
IV Shareholders’ general meeting convened in the reporting period
1. Annual Shareholders’ general meeting within this reporting period
| Session number of meeting | The type of the meeting | The proportion of participate investors | date | Disclosing date | Disclosing index |
| Annual Shareholders’ General Meeting | Annual Shareholders’ general meeting | 29.38% | May 14, 2021 | May 15, 2021 | http://www.cninfo.com.cn |
| The 1st Extraordinary Shareholders’ General Meeting of 2021 | Extraordinary Shareholders’ General Meeting | 21.13% | Dec.13, 2021 | Dec.14, 2021 | http://www.cninfo.com.cn |
V. Information on the Company’s Directors, Supervisors, Senior Management and Staff
1. basic information
| Name | Position | Office-holding state | Sex | Age | Starting date of office term | Ending date of office term | (shares) | (shares) | (share) | (shares) |
| Ji Zhijian | Chairman | Incumbent | M | 54 | Mar. 27, 2014 | 2025 | 1,528,830 | 0 | 0 | 1,528,830 |
| Fan Wen | Director | Incumbent | M | 57 | Jan.12, | Jan.11, | 7,770 | 0 | 0 | 0 |
| 2022 | 2025 | |||||||||
| Yin Xide | Vice Chairman/ General manager | Incumbent | M | 50 | 2022 | 2025 | 90,080 | 0 | 0 | 0 |
| Song Wenbao | Director/ Board secretary | Incumbent | M | 48 | 2022 | 2025 | 593,880 | 0 | 0 | 593,880 |
| Dono Shigeru | Director | Incumbent | M | 60 | 2022 | 2025 | 0 | 0 | 0 | 0 |
| Nishimoto Shigeyuki | Director | Incumbent | M | 55 | Jun.5,2019 | 2025 | 0 | 0 | 0 | 0 |
| Zhai Yunling | Independent director | Incumbent | M | 58 | May.14,2021 | 2025 | 0 | 0 | 0 | 0 |
| Liu Yuanyuan | Independent director | Incumbent | F | 47 | May.14,2021 | 2025 | 0 | 0 | 0 | 0 |
| Yao Hong | Independent director | Incumbent | F | 48 | May.14,2021 | 2025 | 0 | 0 | 0 | 0 |
| Hu Xitang | Chairman of the board of Supervisors | Incumbent | M | 54 | Jan. 17, 2019 | 2025 | 0 | 0 | 0 | 0 |
| Dai Yuling | Supervisor | Incumbent | F | 44 | Jan. 21, 2016 | 2025 | 0 | 0 | 0 | 0 |
| Li Sheng | Supervisor | Incumbent | M | 42 | 2020 | 2025 | 0 | 0 | 0 | 0 |
| Wang Jinxiu | Chief Financial Officer | Incumbent | F | 51 | 2021 | 2025 | 5,000 | 0 | 0 | 5,000 |
| Yang Fuhua | Deputy general manager | Incumbent | M | 50 | Jan.12,2022 | 2025 | 0 | 0 | 0 | 0 |
| Lu Jun | Deputy general manager | Incumbent | M | 56 | Jan.12,2022 | 2025 | 2,500 | 0 | 0 | 2,500 |
| Xu Junrao | Director | Leaving | F | 59 | Mar. 27, 2014 | 2022 | 995,349 | 0 | 0 | 995,349 |
| Fan Yuekun | Director DGM | Leaving | M | 58 | 2015 | 2021 | 210,000 | 0 | 0 | 210,000 |
| Dai Dashuang | Independent director | Incumbent | F | 71 | 2015 | 2021 | 0 | 0 | 0 | 0 |
| Liu Jiwei | Independent director | Incumbent | M | 61 | 2015 | 2021 | 0 | 0 | 0 | 0 |
| Wang Yan | Independent director | Incumbent | F | 58 | 2015 | 2021 | 0 | 0 | 0 | 0 |
| Ma Yun | Chief Financial Officer | Incumbent | M | 50 | Jan. 21, 2016 | 2022 | 35,000 | 0 | 0 | 35,000 |
| Total | 3,993,409 | 0 | 0 | 3,993,409 |
During the reporting period, whether any directors or supervisors leave office or seniormanagers are dismissed
√Applicable □Not applicable
During the reporting period, Fan Yuekun, director and deputy general manager of the Company, resigned due to
job changes and no longer held any positions in the Company after his resignation.During the reporting period, Ma Yun, chief financial officer of the Company, resigned due to job changes and nolonger held any positions in the Company after his resignation.Changes of directors, supervisors, senior managers of the Company
| Name | Position held | Type | Date | Reason |
| Ding Jie | Vice Chairman | Leave office after the end of term | Jan 12,2022 | After the general election, Mr. Ding Jie no longer served as vice chairman of the Company |
| Xu Junrao | Director | Leave office after the end of term | Jan 12,2022 | After the general election, Mrs. Xu Junrao no longer served as director of the Company |
| Fan Yuekun | Director; DGM | Leaving office | March 26, 2021 | Resign from the Company due to job changes |
| Dai Dashuang | Independent director | Leave office after the end of term | May 14, 2021 | Leave office after the end of term |
| Liu Jiwei | Independent director | Leave office after the end of term | May 14, 2021 | Leave office after the end of term |
| Wang Yan | Independent director | Leave office after the end of term | May 14, 2021 | Leave office after the end of term |
| Ding Jie | GM | Termination of employment | Jan 1,2021 | Termination of employment due to job changes |
| Ma Yun | Chief Financial Officer | Leaving office | May 6, 2021 | Resign from the Company due to job changes |
| Yin Xide | Director | be elected | May 14, 2021 | By-election of director at general meeting of shareholders |
| Zhai Yunling | Independent director | be elected | May 14, 2021 | By-election of director at general meeting of shareholders |
| Liu Yuanyuan | Independent director | be elected | May 14, 2021 | By-election of director at general meeting of shareholders |
| Yao Hong | Independent director | be elected | May 14, 2021 | By-election of director at general meeting of shareholders |
| Yin Xide | GM | Appointed | Jan 1,2021 | Appointed by the Board of Directors |
| Wang Jinxiu | Chief Financial Officer | Appointed | May 14, 2021 | Appointed by the Board of Directors |
2. Office holding
Professional background, main work experiences and the main duties and responsibilities of incumbent directors,supervisors, senior managers of the Company
| Name | Position held | Professional background | Main work experience | main duties and responsibilities |
| Ji Zhijian | Chairman | doctorate degree in management of the Dalian University of Technology | Successively acting as GM, Chairman of Panasonic Cold-Chain.; Chairman and President of Dalian Bingshan Group Co., Ltd.; Chairman of the Company. | Related responsibilities of the Chairman |
| Yin Xide | Vice Chairman and GM | Graduated from Dalian University of | served as sales director, copy director and General manager of low-temperature logistics Equipment Division of Panasonic Cold | Related responsibilities of |
| Technology, majoring in thermal engineering | Chain (Dalian) Co., LTD.; the General Manager of Panasonic Appliances Refrigerating System (Dalian) Co., Ltd . | the Director | ||
| Fan Wen | Director | Graduate degree | served as vice Minister of Import and Export Department and Minister of Import and Export Department of the Company; Assistant general Manager and Vice President of DalianBingshan Group Co., LTD.; Director of Jiangsu JingXue Insulation Technology Co.,Ltd. | Related responsibilities of the Director |
Song Wenbao
| Song Wenbao | Director and Board Secretary | graduate from Zhejiang University，CFA | Successively acting as representative for securities affairs, board secretary of the Company. | Related responsibilities of Board Secretary |
| Dono Shigeru | Director | Graduated from Kyoto University in Japan. | served as technical director of beauty & Life Department, business director and planning director of Kitchen Appliances Division, food distribution business director, Kitchen space business director, HA business director and vice president of Panasonic Corporation; Executive attendant of Panasonic Corporation. Currently, he is the head of household appliances division, head of household appliances, and president of China & Northeast Asia Co., LTD;; the supervisor of Dalian Bingshan Group Co., LTD. | Related responsibilities of the Director |
| Nishimoto Shigeyuki | Director | graduated from Meiji university | served as the director of Financial Planning Room and Finance Department System Overall Room of Panasonic Corporation Headquarter; the director of Regional Financial Integration Room, CFO of Panasonic Corporation China & Northeast Asia Company; the supervisor of Dalian Bingshan Group Co., LTD. | Related responsibilities of the Director |
| Zhai Yunling | director | Doctor of Law, professor, lawyer | Professor of Law School of Dalian Maritime University, lawyer of Beijing Jincheng Tongda (Dalian) Law Firm, legal adviser of Dalian Municipal People's Government, member/arbitrator of Dalian Arbitration Commission | director |
Liu Yuanyuan
| Liu Yuanyuan | director | Doctor of Accounting | Professor of Accounting School of Dongbei University of Finance and Economics, Director of Sino-German Management Control Research Center, independent director of China Railway Tielong Container Logistics Co., LTD.,; independent director of Bank of Dalian Co., LTD.; independent director of Kincai (Liaoning) Life Science and Technology Co., LTD. | director |
| Yao Hong | director | graduate from China University of Political Science and Law，professor of law | Doctor of Management, School of Economics and Management, Dalian University of Technology, Independent director of Shanghai Binku Network Technology Co., LTD., Independent director of Hualu Zhida Technology Co., LTD., independent director of Harbin Hattou Investment Co., LTD. | director |
Hu Xitang
| Hu Xitang | Chairman of Board of Supervisors | graduated from Nanjing University of Science and Technology | served as the chairman of the labor union of the Company. | Related responsibilities of the Supervisor |
Dai Yuling
| Dai Yuling | Supervisor | Senior Accountant | acting as the chief of the Financial Dept. of Dalian Bingshan Group Company Ltd. | Related responsibilities of the Supervisor |
| Li Sheng | Supervisor | graduated from Dalian University of Technology |
acting as the Director of Operation Management Department ofDalian Bingshan Group Company Ltd；chief of the Financial Dept. ofthe Company.
| Related responsibilities of the Supervisor | ||||
| Yang Fuhua | DGM | graduated from Xi 'an Jiaotong University, Senior Engineer | served as engineer, deputy director and director of complete set design Department of the Company; served as deputy General Manager of Dalian Bingshan Group Engineering Co., LTD; served as chief engineer of the Company's business Headquarters and deputy Head of the Research and development Headquarters. | Related responsibilities of DGM |
Lu Jun
| Lu Jun | DGM | graduated from Jilin University of Technology, Graduate degree, Senior Engineer. | served as designer and vice minister of the Company; general Manager of Dalian Bingshan Air-conditioning Equipment Co., Ltd; the Deputy General Manager of Dalian Bingshan Group Engineering Co., LTD. ; the assistant to the general Manager and head of the Operation and Management Department of the Company. | Related responsibilities of DGM |
| Wang Jinxiu | CFO | Senior accountant | served as cost accountant in finance Department of the Company and Minister of Finance Department of DalianBingshan Air Conditioning Equipment Co., LTD.; served as the Director of the Financial Management Department of the Company. served as Chief Financial Officer since May 2021. | Related responsibilities of CFO |
Office holding in shareholder unit
√ Applicable □ Not applicable
| Name of office holder | Shareholder unit name | Position held in shareholder unit | If receiving remuneration or allowance from shareholder unit |
| Ji Zhijian | Dalian Bingshan Group Co., Ltd. | Chairman of the Board, President | Yes |
| Fan Wen | Dalian Bingshan Group Co., Ltd. | Vice President | Yes |
Office holding in other units
√ Applicable □ Not applicable
| name | unit name | Position held in other unit | If receiving remuneration or allowance from other unit |
| Ji Zhijian | Dalian Zhong Huida Refrigeration Technology Co., Ltd. | Chairman | No |
| Fan Wen | Wuhan New World Refrigeration Industrial Co., Ltd. | Chairman | No |
| MHI Bingshan Refrigeration (Dalian) Co., Ltd. | Chairman | No | |
| Dalian Niweisi LengNuan Technology Co., Ltd | Chairman | No | |
| Dalian Bingshan Lingshe Quick Freezing Equipment Co., Ltd | Chairman | No | |
| Dalian Bingshan Air-Conditioning Equipment Co., Ltd | Chairman | No | |
| Yin Xide | Dalian Bingshan Group Construction Co., Ltd | Chairman | No |
| Liu Yuanyuan | China Railway Tielong Container Logistics Co., LTD. | Independent director | Yes |
| Bank of Dalian Co., LTD. | Independent director | Yes | |
| Kincai (Liaoning) Life Science and Technology Co., LTD. | Independent director | Yes | |
| Yao Hong | Shanghai Binku Network Technology Co., LTD. | Independent director | Yes |
| Hualu Zhida Technology Co., LTD. | Independent director | Yes |
| Harbin Hattou Investment Co., LTD. | Independent director | Yes |
3. Remuneration paid to directors, supervisors, and senior management
Decision-making procedure, decision-making basis and actual payment of remuneration for directors, supervisorsand senior managementDecision-making procedure: the Company's remuneration plan for directors and supervisors was proposed by theCompany's Remuneration and Evaluation Committee of the Board of Directors, and after approval by the Boardof Directors, submitted to the general meeting for adoption and put into effect. The Company’s remuneration planfor senior management was put into effect after approval by the Company’s Board of Directors.Decision-making basis: it was decided on the basis of main responsibilities and importance of the concernedposition and the remuneration level of similar positions in other similar enterprises and evaluated and rewardedthrough the Company’s examination procedure for assets operation performance.The total amount of remunerations actually ( pre-tax ) paid by the Company to directors, supervisors, and seniormanagement was 371.15 thousand yuan.
Particulars about the annual remuneration of directors, supervisors and senior staff members
| Name | (ten thousand yuan) |
| Ji Zhijian | 0 |
| Xu Junrao | 0 |
| Ding Jie | 0 |
| Yin Xide | 96.27 |
| Yokoo Sadaaki | 0 |
| Nishimoto Shigeyuki | 0 |
| Zhai Yunling | 8 |
| Liu Yuanyuan | 8 |
| Yao Hong | 8 |
| Hu Xitang | 77.49 |
| Dai Yuling | 0 |
| Li Sheng | 28.95 |
| Wang Jinxiu | 42.44 |
| Song Wenbao | 57.76 |
| Fan Yuekun | 18.41 |
| Ma Yun | 25.83 |
| Total | 371.15 |
VI. Performance of directors' duties during the reporting period
1.The situation of the board of Directors during this reporting period
| The meeting time | Date of meeting | Date of disclosure | The meeting resolution |
| 15th Meeting of 8th Session of the Board | March 19, 2021 | March 20, 2021 | http://www.cninfo.com.cn |
| 16th Meeting of 8th Session of the Board | April 22,2021 | April 24,2021 | http://www.cninfo.com.cn |
| 17th Meeting of 8th Session of the Board | May 14,2021 | May 15,2021 | http://www.cninfo.com.cn |
| 18th Meeting of 8th Session of the Board | August 24,2021 | August 25,2021 | http://www.cninfo.com.cn |
| 19th Meeting of 8th Session of the Board | September 29,2021 | September 30,2021 | http://www.cninfo.com.cn |
| 20th Meeting of 8th Session of the Board | October 27,2021 | October 28,2021 | http://www.cninfo.com.cn |
| 21th Meeting of 8th Session of the Board | November 26,2021 | November 27,2021 | http://www.cninfo.com.cn |
| 22th Meeting of 8th Session of the Board | December 23,2021 | December 24,2021 | http://www.cninfo.com.cn |
2. Attendance of directors at the board of directors and general meetings of shareholders
During the reporting period, all directors were present in person at all board meetings where they were required tobe present.
3.Objections raised by directors to matters related to the company
□ Applicable √ Not applicable
4. Other instructions for the performance of directors' duties
□ Applicable √ Not applicable
VII. Execution of duties of the special committees under the Board of Directors in thereporting periodThe audit committee under the Board of Directors of the Company performs its duties in accordance with thedetailed rules for the implementation of the audit committee under the Board of Directors and the workingprocedures for the annual report of the audit committee, supervises the Company's internal audit system and itsimplementation, reviews the Company's financial information and its disclosure, and evaluates the work ofexternal audit institutions.In the evaluation of the Company's internal control, the audit committee actively plays its responsibilities oforganization, leadership and supervision. According to the identification standard of internal control defects of theCompany, the annual internal control evaluation report of the Company was reviewed, and ShineWing CertifiedPublic Accountants was entrusted to conduct internal control audit. It is considered that the current situation of theCompany's internal control system meets the relevant requirements and has been well implemented. The annualinternal control evaluation report of the Company truthfully reflects the above facts.During the annual audit of the company, the audit committee actively communicated and effectively coordinatedwith the audit institution ShineWing certified public accountants. Before and after the audit, we have repeatedlyurged the audit institutions to promote the audit work with quality and quantity on the audit work plan and workprogress. After the completion of the audit, the annual financial report and annual report of the company werecarefully reviewed, and it was considered that the financial report of the company was comprehensive and true,and the financial report and other information disclosed by the company were objective and true, which trulyreflected the annual financial situation of the company.The Audit Committee believes that ShineWing Certified Public Accountants can abide by the independent,objective and fair practice standards in providing annual audit services for the Company, audit the Company instrict accordance with the new accounting standards, actively communicate with the audit committee andindependent directors, be diligent and responsible, and better complete the annual audit of the Company. It isproposed that the Company renew the appointment of ShineWing Certified Public Accountants as the auditinstitution of the Company in 2022.
The remuneration and assessment committee under the Board of Directors of the Company performed its duties inaccordance with the implementation rules of the remuneration and assessment committee of the Board ofDirectors of the Company, and reviewed the annual remuneration of the directors, supervisors and seniormanagers of the Company.
VIII. Work of the Board of SupervisorsWas there any risk with the Company found by the Board of Supervisors in their supervision activities in thereporting period?
□ Applicable √ Not applicable
The Board of Supervisors had no objections to the matters under supervision in the reporting period.IX Status of the Company's staff
1. As of Dec. 31, 2021 the Company and its subsidiary had 2,485 enrolled employees, including 1,299 personsengaged in production; 338 persons engaged in marketing; 304 persons engaged in engineering and technology;55 persons engaged in financing; and 489 persons engaged in management.
2. As of Dec. 31, 2021, among enrolled employees of the Company and its subsidiary, 76 persons have theeducational background of Master or higher; 718 persons have the educational background of university; 736persons have the educational background of junior college; and 955 persons have the educational background ofsecondary technical school or lower.
3. The Company applied the employee job performance wage system with distribution according to positions andperformance of an employee.
4. The Company formulated the annual training plan and gave purposeful training to an employee in considerationof his/her post requirement.
5. Labor outsourcing
□ Applicable √ Not applicable
X. Profit distribution and dividend paymentBy giving consideration to both the return to shareholders and the Company's long-term development, and incombination of the Company's profit made in this year, the Company formulated the 2020 annual dividenddistribution plan of paying the cash of 0.1 yuan for every 10 shares. Reviewed and adopted at the Company'sgeneral meeting, the Company's Board of Directors has implemented the plan in July 2021.Formulation and implementation of the Company's cash dividend distribution policy in the reporting periodcomplied with the Company's Articles of Association and the general meeting's resolution, and the dividenddistribution standard and proportion were defined and clear and the applicable decision-making procedure andsystem were complete. The independent directors agreed on it and the legal rights and interests of minorityshareholders were well protected.
| Special notes to cash dividend payout policy | |
| If the regulations of the Articles of Association or the requirements of the shareholders of the company meeting are met: | Yes |
| If the dividend payout standard and proportion is definite and clear-cut: | Yes |
| If relevant decision-making procedure and mechanism is complete: | Yes |
| If the independent directors have performed their duties and played their due role: | Yes |
| If small and medium shareholders have the opportunity to sufficiently express their opinions and appeals and if their legal rights and interests are sufficiently protected: | Yes |
| If the condition and procedure for adjusting or changing the cash dividend payout policy is compliant and transparent: | Yes |
The Company made profit in the reporting period and the undistributed profit of the parent company was positivebut no cash dividend distribution plan was proposed.
□ Applicable √ Not applicable
Profit distribution preplan, and preplan of share-granting with capital accumulation fund of the Company
| Bonus shares to be presented for every 10 shares (shares) | 0 |
| Dividend to be distributed for every 10 shares (RMB yuan) (including tax) | 0.1 |
| Equity base for distribution preplan (shares) | 843,212,507 |
| Total amount of cash dividend distribution (RMB yuan) (including tax) | 8,432,125.07 |
| Profit distributable to the shareholders in the current year | 803,564,427.95 |
| Proportion of cash dividend distribution accounting for total profit distribution | 100% |
| Cash dividend distribution policy: | |
| When the development stage of the company belongs to a growth period with important fund disbursement arrangement(s), the proportion of cash dividend distribution accounting for this profit distribution should reach 20% at minimum when conducting profit distribution. | |
| Notes to details about preplan for profit distribution or capital stock increase with capital reserve | |
| According to the audit by ShineWing CPAs (Special General Partnership), the net profit made by the parent company of the Company in 2021 was RMB -86.252 million. Plus the initial undistributed profit of RMB 911.033 million and minus the dividend of RMB 8.432 million of common shares paid in 2020 and the drawn free surplus reserve of RMB 12.785 million (20%), the accumulated profit distributable to the shareholders was RMB 803.564 million. The Company’s profit distribution preplan for 2021: Based on the total capital stock of 843,212,507 shares, the dividend of RMB 0.1 in cash (including tax) will be distributed for every 10 shares, the total cash dividend is RMB 8.432 million, and the cash dividend for B share is converted and paid in Hong Kong dollars. If the share capital changes from the disclosure of this plan to the equity registration date of implementing the profit distribution plan, the distribution proportion will be adjusted accordingly according to the principle that the total distribution amount remains unchanged. The above preplan shall be submitted to the 2021 shareholders’ general meeting for review and approval. | |
XI．The implementation and effect of equity incentive
□ Applicable √ Not applicable
XII．Internal control system construction and implementation during the reporting period
1. Internal control construction and implementation
During the reporting period, the Company made positive innovation, took the initiative to change, and vigorouslypromoted organizational strengthening. Implement market-centered integrated operation through organizationalrestructuring, business process reengineering and management system revision. Through the project managementsystem, fully implement the project budget, control the whole process of operation, ensure profits and preventrisks.
2. Details of material weakness in the internal control found in the reporting period described in the reporton self-evaluation of internal control.
□ Applicable √ Not applicable
There was no material weakness in the internal control found in the reporting period.
XIII．Management and control of subsidiaries during the reporting period
During the reporting period, the Company focused on strengthening the management control of subsidiaries fromthe following aspects:
(1) The Company carefully identified, strictly managed and dynamically adjusted the directors, supervisors andsenior managers assigned to subsidiaries;
(2) The Company participated in the whole process of the preparation of the annual business plan of itssubsidiaries, made reasonable suggestions and gave appropriate guidance;
(3) The Company conducted monthly/quarterly tracking and annual assessment on the implementation of businessplans and compliance operations of subsidiaries.
XIV．Report on self-evaluation of internal control or internal control audit report
1. Report on self-evaluation of internal control
| Details of material weakness in the internal control found in the reporting period described in the report on self-evaluation of internal control | |
| There was no material weakness in the internal control found in the reporting period. | |
| Date of disclosing the full text of the report on self-evaluation of internal control | Apr.23, 2022 |
| Disclosure reference to the full text of the report on self-evaluation of internal control | For the 2021 annual report on self-evaluation of internal control of the Company, visit the website www.cninfo.com.cn. |
2. Internal control audit report
| Description of the deliberation opinions in the internal control audit report | |
| We think that as of Dec. 31, 2021, Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. had maintained an effective internal control over the financial reports in all material aspects according to Basic Enterprise Internal Control Specification and relevant regulations. | |
| Date of disclosing the full text of the internal control audit report | Apr. 23, 2022 |
| Disclosure reference to the full text of the internal control audit report | For the 2021 annual internal control audit report of the Company, visit the website www.cninfo.com.cn. |
Did the accounting firm issue the internal control audit report with nonstandard opinions?
□ Applicable √ Not applicable
Was the internal control audit report issued by the accounting firm consistent with the opinion in theself-evaluation report of the Board of Directors?
√Yes □ No
XV. Rectification of problems in self inspection of special actions for governance of listedcompanies
Rectification problem 1 found by the Company: The minutes of the meeting of the Board of Supervisors did notfully record all the key points of the supervisors' speeches
(1) Problem Description: during 2018, the minutes of the meeting of the Board of Supervisors were incomplete.
(2) Rectification Description: it is confirmed that there was no objection or abstention of supervisors in the votingat the meeting of the Board of Supervisors in 2018, and the Board of Supervisors played a good role insupervising the performance of the Board of Directors. The Board of Supervisors was changed in January 2019.After self inspection in 2020, the Company standardized the content and form of minutes of meetings of the Boardof Supervisors as required, improved the key points of records, and ensured that the records were true, accurateand complete.
Rectification problem 2 found by the Company: The current independent director has served for more than 6consecutive years
(1) Problem Description: as of February 2021, Dai Dashuang and Liu Jiwei, independent directors of theCompany, have been reappointed in the Company for six years.
(2) Rectification instructions: the Company immediately communicated with independent directors Dai Dashuangand Liu Jiwei, and made arrangements for the election of new independent directors. Later, Dai Dashuang and LiuJiwei submitted their resignation reports to the Company on March 19, 2021. On May 14, 2021, the newindependent directors of the Company were elected and approved by the general meeting of shareholders, and theindependent directors of the Company were successfully replaced, which had no material adverse impact oncorporate governance.
Section 5 Environmental and social responsibilityI．Major environmental issuesThe listed company and its subsidiaries whether belong to heavy pollution industry formulated by the stateenvironmental protection department
□Yes √ No
Administrative penalties imposed for environmental problems during the reporting period
□Yes √ No
| Enterprise or subsidiary | Main pollutant and features | Way of discharge | Number of discharge outlet | Distribution of the discharge outlet | Emission concentration | Pollutant discharge standard implemented | Total discharge | Total approved emissions | Excessive emission |
| Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. | COD | sequence | 1 | Unified discharged | 138㎎/L | DB21 1627-2008 | 9.816tons | None | Not over standard |
| Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. | Ammonia nitrogen | sequence | 1 | Unified discharged | 6.66㎎/L | DB21 1627-2008 | 0.489tons | None | Not over standard |
| Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. | Dust | sequence | 1 | Unified discharged | 10.6mg/m3 | GB9078-1996 | 2.132 tons | None | Not over standard |
The Company received the new version of the "Sewage Discharge Permit" issued by the Dalian EcologicalEnvironment Bureau in July 2020. The Company discharges within the limit according to the required emissionconcentration of the new version of "Sewage Discharge Permit".
Measures and effects taken by the Company to reduce carbon emissionsDuring the reporting period, the Company implemented the green, energy-saving and efficient lean productionmode in the production process, continuously improved the operation mode, improved the operation efficiency,reduced the operation cost, and continued to move forward towards intelligent manufacturing and greenmanufacturing.During the reporting period, the Company used the roofs of some plants in the new plant area to build phase Iphotovoltaic power generation project by using the mode of self use and surplus power on the Internet, andconnected to the grid in early November 2021. The installed power of the project is 3.4 MW, the annual powergeneration is about 4.08 million kwh, and the annual carbon dioxide emission is reduced by about 4,067 tons.During the reporting period, focusing on energy conservation and carbon reduction, the Company developed andapplied high-efficiency compressor energy conservation, green refrigerant, CCUS (carbon capture, utilization andstorage) and other technologies, and completed a number of energy conservation and carbon reduction projectswith customers in the fields of coal mine waste heat recovery, liquefied natural gas cold energy utilization,petroleum refining and other fields, creating good economic and social benefits.
II．Social responsibilitiesThe specific content of the Company's performance of social responsibility can be found in the SocialResponsibility Report disclosed on Juchao information website on April 23, 2022.III. We consolidated and expanded our achievements in poverty alleviation and rural revitalizationIn 2021, combined with its main business, the Company continued to consolidate the achievements of povertyalleviation, invested 60,000 yuan in Songlin village, Guangmingshan Town, Zhuanghe City to aid the constructionof village level wireless broadcasting system project, and maintained the air conditioning equipment of villagers'cultural activity center. Meanwhile, during the epidemic period in Zhuanghe City, the Company actively raisedabout 20,000 yuan of epidemic prevention goods to provide support for the epidemic prevention work in Songlinvillage.
Section 6 Important items
I Implementation of commitments
1. Commitments of the Company or its shareholders holding 5% or higher of the shares in the reportingperiod or carried to the reporting period
□Applicable √Not applicable
2. The company's assets or projects have earnings forecasts, and the reporting period is still in the period ofearnings forecasts. The company explains the reasons why the assets or projects have reached the originalearnings forecasts.
□Applicable √Not applicable
II. Non-operation capital occupation by holding shareholders and their related parties in thelisted company
□Applicable √Not applicable
The Company had no capital occupation by the holding shareholders and their related parties in the listedcompany within this reporting period.III. Foreign guarantee in violation of regulations
□ Applicable √ Not applicable
IV. Explain to the “non standard audit report” last year from the board of directors of theCompany
□Applicable √Not applicable
V. Explain to the “non standard audit report” from the board of directors, board ofsupervisors of the Company
□Applicable √Not applicable
VI. Change in accounting policies, accounting estimates and accounting methods or correctionof major accounting mistakes in the reporting period, which should be retroactively restatedcompared with the financial statements of the previous year
√Applicable □Not applicable
On December 7, 2018, the Ministry of Finance issued the "notice on revising and Issuing the accounting standardsfor Business Enterprises No. 21 - leasing" (CK [2018] No. 35), and revised the accounting standards for BusinessEnterprises No. 21 - leasing (hereinafter referred to as the "new leasing standards"). Enterprises listed both athome and abroad and enterprises listed abroad and preparing financial statements using international financialreporting standards or accounting standards for business enterprises shall be implemented as of January 1, 2019;Other enterprises that implement the accounting standards for business enterprises shall implement them as ofJanuary 1, 2021. When preparing the financial statements of 2021, the Company implemented the relevantaccounting standards and handled them in accordance with the relevant connection provisions.VII. Change in the range of consolidated statements compared with the financial statementsof the previous year
□Applicable √Not applicable
VIII. Engagement and dismissal of the accounting firmCurrently engaged accounting firm
| Name of domestic accounting firm | ShineWing CPAs (Special General Partnership) |
| Remuneration paid to the domestic accounting firm (in 10 thousand yuan) | 107 |
| Continuous audit service years of the domestic accounting firm | 6 |
| Name of certified public accountants with the domestic accounting firm | Lin Li, Zhang Shizhuo |
| Continuous audit service years of the certified public accountants | Lin Li 1 year, Zhang Shizhuo 3 years |
If the CPA firm retaining was changed in this period
□Applicable √Not applicable
Employment of internal control audit accounting firm, financial advisor or sponsor
√ Applicable □ Not applicable
During the reporting period, the Company hired ShineWing CPAs (Special General Partnership) as the Company's2021 audit institution to conduct an integrated audit of the Company's financial reports and internal control.
IX. Facing suspend and terminate listing after the annual report disclosure
□ Applicable √ Not applicable
X. Bankruptcy restructuring related matters
□ Applicable √ Not applicable
XI. Major lawsuit and arbitration issues
□ Applicable √ Not applicable
XII. Punishment and rectification
□ Applicable √ Not applicable
XIII．The credibility of companies and its controlling shareholder, actual controller
√ Applicable □ Not applicable
The controlling shareholder of the Company and the Company don’t exist situation such as unfulfilled the court’seffective judgments or failed to pay duly a large amount of debt during the reporting period.
XIV．Important associated transactions
1. Related party transactions related to daily operations
During the reporting period, the total amount of normal associated transactions between the Company andassociated parties was 514,680 thousand yuan, accounting for 74.59% of the budgeted amount for the year 2021.This included 139,890 thousand yuan, accounting for 53.19% of the budgeted amount for the year 2021, forpurchasing supporting products for package projects from associated parties, and 374,790 thousand yuan,accounting for 87.77% of the budgeted amount for the year 2021, from selling supporting parts and components toassociated parties.
2. Associated transactions related to purchases or sales of assets
□Applicable √ Not applicable
3. Important associated transactions with joint external investments
□ Applicable √ Not applicable
4. Associated transactions related to rights and debts
□ Applicable √ Not applicable
5. Associated transactions with related financial companies
□ Applicable √ Not applicable
6. The transactions between the financial company controlled by the company and its related parties
□ Applicable √ Not applicable
7. Other associated transactions
√ Applicable □ Not applicable
1. In order to strengthen the financing of cold and hot industrial chain, boost sales and recycling, the Companysigned the equity transfer contract with Dalian Zhonghuida Refrigeration Technology Co., Ltd. and transferred20% equity of Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd. held by Dalian ZhonghuidaRefrigeration Technology Co., Ltd. The above matters were deliberated and adopted at the 15th meeting of the 8thBoard of Directors of the Company on March 19, 2021. The Company's announcement on related partytransactions of transferring the equity of Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd. wasdisclosed in China Securities Journal and cninfo.com (2021-004) on March 20, 2021.
2. In order to optimize the asset structure and help improve the main business, the Company signed an equitytransfer agreement with Panasonic electric (China) Co., Ltd. ("Panasonic China") and transferred all the 40%equity of Panasonic refrigeration (Dalian) Co., Ltd. to Panasonic China. The Company's announcement on relatedparty transactions on the transfer of equity of Panasonic refrigeration (Dalian) Co., Ltd. was disclosed in ChinaSecurities Journal and cninfo (2021-043) on November 27, 2021.XVII. Major contract and its performance
1. Hosting, contracting and leasing status
(1) the hosting status
□ Applicable √ Not applicable
(2)the contracting status
□ Applicable √ Not applicable
(3) the leasing status
√ Applicable □ Not applicable
The 13th meeting of the 7th board of directors of the Company was held on April 22, 2017, and approved to rentout the old plant and land located in No 888, South West RD, Shahekou Districit, Dalian to Bingshan Wisdom.The lease contract is from April 1, 2017 to December 31, 2036. The Company has signed the “estate leasingcontract” with Dalian Bingshan Wisdom based on the requirement of utilization of old land and plant and newbusiness foster plan. Current year’s lease premium is RMB 8.19 million.On July 31, 2014, the Company and Lingzhong Bingshan Refrigeration (Dalian) Co., Ltd. signed a supplementaryagreement to modify the house lease contract, and rent out the Building No. 6 of Workshop No. 106, Liaohe EastRoad, Dalian Development Zone, to Lingzhong Bingshan Refrigeration (Dalian) Co., Ltd.. The rental area is15,259.04 square meters, and lease period will end on July 16, 2029, the annual rent is RMB 3.81 million.The Company's subsidiary Bingshan Lingxie signed a house lease contract with Dalian Jingxue Energy SavingTechnology Co., Ltd. on June 1, 2017., and rent out the factory building located at No. 92 Tieshan West Road,Dalian Development Zone, to Dalian Jingxue Energy Saving Technology Co., Ltd.. The rental area is 3,653.76square meters, and lease period from June 1, 2017 to May 31, 2022, the annual rent is RMB 1 million.
2. Guaranteeing status
□ Applicable √ Not applicable
3. Entrust others to cash assets management
(1)Trust management
□Applicable √Not applicable
(2)Entrusted loans
□Applicable √Not applicable
(3)Other important contracts
□ Applicable √ Not applicable
XIX. Other important matters
□ Applicable √ Not applicable
XX. Other important matters of subsidiary company
□ Applicable √ Not applicable
Section 7 Change in Share Capital and Shareholders' Information
I. Change in share capital
1. Change in share capital
| items | （before change） | （after change） | ||
| number | proportion | number | proportion | |
| I. Non-circulating share capital with restricted trade conditions | 3,058,879 | 0.36% | 3,130,189 | 0.37% |
| II. Circulating share capital | 840,153,628 | 99.64% | 840,082,318 | 99.63% |
| 1. Domestically listed ordinary shares | 598,653,628 | 71.00% | 598,582,318 | 70.99% |
| 2. Domestically listed foreign shares | 241,500,000 | 28.64% | 241,500,000 | 28.64% |
| III. Total shares | 843,212,507 | 100.00% | 843,212,507 | 100.00% |
The reason for the Change in share capitalDuring the reporting period, the Company employed Yin Xide, the general manager, and Wang Jinxiu, the chieffinancial officer. Fan Yuekun, the director and deputy general manager of the Company, resigned, and Ma Yun,the chief financial officer, resigned. The lock-in shares of senior executives changed, resulting in changes in thecomposition of shares.Approval of changes in shares
□ Applicable √Not applicable
The restricted shares changes
□ Applicable √Not applicable
II. Securities issuance and listing
1. Securities issuance in the report period
□ Applicable √ Not applicable
2. Change in total shares of the Company and structure of shareholders
□ Applicable √ Not applicable
3. Internal staff shares
□ Applicable √ Not applicable
III. Shareholders and actual controller
1. Number of shareholders and their shareholding
| Total number of shareholders in the reporting period | 54,572 | Total number of shareholders as of the last month before disclosure of the annual report | 82,592 | |||||||
| Shareholding of top ten shareholders | ||||||||||
| Name | Nature | Proportion | Total number | Number of shares with sale restriction | Number of pledged shares or shares frozen | |||||
| Dalian Bingshan Group Co., Ltd. | Domestic non-state-owned legal person | 20.27% | 170,916,934 | 0 | 0 | |||||
| Sanyo Electric Co., Ltd. | Overseas legal person | 8.72% | 73,503,150 | 0 | 0 | |||||
| Lin Zhenming | Foreign natural person | 0.80% | 6,770,000 | |||||||
| Wu An | Domestic natural person | 0.53% | 4,500,000 | |||||||
| Xue Hong | Domestic natural person | 0.43% | 3,600,000 | |||||||
| Dalian industrial development investment Co., Ltd. | Domestic non-state-owned legal person | 0.40% | 3,406,725 | |||||||
| Chen Yong | Domestic natural person | 0.40% | 3,339,378 | |||||||
| Li Xiaohua | Domestic natural person | 0.37% | 3,145,608 | |||||||
| Zhan Changcheng | Domestic natural person | 0.35% | 2,971,647 | |||||||
| Chen Cirou | Domestic natural person | 0.31% | 2,635,550 | |||||||
| Shareholding of top ten shareholders without sale restriction | ||||||||||
| Name | Number of shares without sale restriction | Type of shares | ||||||||
| Dalian Bingshan Group Co., Ltd. | 170,916,934 | RMB denominated ordinary shares | ||||||||
| Sanyo Electric Co., Ltd. | 73,503,150 | Domestically listed foreign shares | ||||||||
| Lin Zhenming | 6,770,000 | Domestically listed foreign shares | ||||||||
| Wu An | 4,500,000 | Domestically listed foreign shares | ||||||||
| Xue Hong | 3,600,000 | Domestically listed foreign shares | ||||||||
| Dalian industrial development investment Co., Ltd. | 3,406,725 | RMB denominated ordinary shares | ||||||||
| Chen Yong | 3,339,378 | RMB denominated ordinary shares | ||||||||
| Li Xiaohua | 3,145,608 | RMB denominated ordinary shares | ||||||||
| Zhan Changcheng | 2,971,647 | Domestically listed foreign shares | ||||||||
| Chen Cirou | 2,635,550 | Domestically listed foreign shares | ||||||||
| Notes to the associated relationship and uniform actions of the above shareholders | Dalian Bingshan Group Co., Ltd. had the association relationship with Sanyo Electric Co., Ltd. among the above shareholders. Sanyo Electric Co., Ltd. holds 26.6% of Dalian Bingshan Group Co., Ltd.'s equity. | |||||||||
2. Controlling shareholder of the Company
| Name of holding shareholder | Legal representative | Founding date | Unified social credit code | Main business |
| Dalian Bingshan Group Co., Ltd. | Ji Zhijian | Jul. 3, 1985 | 912102002412917931 | Research, development, manufacture, sales, service and installation of industrial refrigeration products, freezing and cold storage products, large-, medium- and small-size air-conditioning products, petrochemical equipment products, electronic and electric control products, home appliance products and environment protection products. |
| Shares held by the holding shareholder in other overseas and domestic listed companies as the holding shareholder or ordinary shareholder in the reporting period | None | |||
Change in the holding shareholder in the reporting period
□ Applicable √ Not applicable
3. Actual controller of the Company
The company has no actual controller.According to the actual situation of the Company and its controlling shareholder, and compared with the relatedlaws and regulations including Company Law of People’s Republic of China, Management Regulation on ListingCompany Acquisition and Stock Listing Rules of Shenzhen Stock Exchange, with the confirmation of LiaoningHuaxia law firm, the Company released the Public Notice on Not Having Actual Controller.(No: 2015-025),)which was published on B04 of China Securities, A19 of HK Commercial Daily and Cninfo website on April 242015.
100% 100%
24.97% 8.28% 13.3% 20.2% 26.6% 6.65%
20.27%
The actual controller controlled the Company through a trust or other asset management
□ Applicable √ Not applicable
4. Other legal-person shareholders holding of 10% or more shares
□ Applicable √ Not applicable
5.、controlling shareholders, actual controllers, restructuring the constraint to the stake and othercommitments underweight
□ Applicable √ Not applicable
| State-owned Assets Supervision and Administration Commission ofDalian Municipality Government | Dalian Equipment Manufacture Investment Co., Ltd. | Dalian State-owned Assets Management Co., Ltd. | Dayang Co., Ltd. | Dalan Zhonghuida Refrigeration Technology Co., Ltd. | Sanyo Electric Co., Ltd. | Panasonic Corporation of China |
Dalian Bingshan Group Co., Ltd.
Dalian Bingshan Group Co., Ltd.Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd.
Section 8 Information on Preferred Stock
□ Applicable √ Not applicable
In the reporting period, the Company didn’t own preferred stock.
Section 9 Information on Corporate bonds
The Company’s non-public issuance of exchangeable corporate bonds was listed at the Shanghai Stock Exchangeon August 6, 2018. As of August 1, 2018, according to the using plan disclosed in the prospectus, the raised fundsof the Company’s non-public issuance of exchangeable corporate bonds have been used to repay bank loans. Thespecial account for the Company's 2018 exchangeable corporate bonds fund raising was cancelled in March 2019.Till the reporting period, the Company's exchangeable corporate bondholders exchanged a total of 8.3889 millionshares. The current balance is zero at the end of the reporting period.
Section 10 Financial Report
1. Opinion
We have audited the accompanying financial statements of Bingshan Refrigeration &Heat Transfer Technologies Co., Ltd (“Bingshan Refrigeration & Heat Company”),which comprise the consolidated and company balance sheets as at 31 December 2021,and the consolidated and company income statements, the consolidated and companycash flow statements, the consolidated and company statements of changes in equity forthe year then ended, and notes to these financial statements.In our opinion, the accompanying financial statements have been prepared inaccordance with the requirements of Accounting Standards for Business Enterprises, inall material respects and present fairly the consolidated and the financial position ofBingshan Refrigeration & Heat Company as at 31 December 2021, and of theirconsolidated and the company’s financial performance and cash flows for the year thenended.
2. Basis for Opinion
We conducted our audit in accordance with China Standards on Auditing for ChineseCertified Public Accountants. Our responsibilities under those standards are furtherdescribed in the “Auditor’s Responsibilities for the Audit of the Financial Statements”section of our report. We are independent of Bingshan Refrigeration & Heat Companyin accordance with the Code of Ethics for Chinese Certified Public Accountants, and wehave fulfilled our other ethical responsibilities of the code. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for our audit.
3. Key Audit Matters
Key audit matters are those matters that we consider, in our professional judgment, wereof most significance in our audit of the financial statements of the current period. Thesematters were addressed in the context of our audit of the financial statements as a wholeand, in forming our audit opinion thereon, and we do not express a separate opinion onthese matters.
| Revenue Recognition | |
| Key Audit Matter | How the matter was addressed in the audit |
| Revenue of Bingshan Refrigeration & Heat Company and its subsidiaries mainly come from sales of products and installation. The key concern about the sales revenue is due to the large sales quantities and any potential misstatements existing in the revenue recognition within the appropriate accounting period. Key concern about installation income is because the accounting involved by significant accounting estimate and judgment. Having considered these matters, we recognized revenue recognition as key audit matters. | 1. Understand and evaluate effectiveness of design and operation of the management ‘s internal control over revenue 2. Carried out analytical review and evaluate the reasonableness of sales income and gross profit margin by segmenting the business and sales in conjunction with industry development and actual situation of Bingshan Refrigeration & Heat Company. 3. Sampling test the sales contracts, identify the clause and condition in respect to the contract performance obligation, consideration and risk and reward transfer of the ownership. Evaluate the revenue recognition of Bingshan Refrigeration & Heat Company whether it is in line with the accounting standards. 4. Sampling select product sales revenue record, reconcile to sales invoice, contracts, dispatch note, acceptance note; Sampling select installation sales revenue record, reconcile to invoice, installation contracts and completion report and Evaluate the recognition of revenue whether is in line with the accounting standards 5. Checking actual installation cost by reviewing the contract, invoice and supportive document with signature for the equipment received to evaluate the cost whether it really incurred. 6. Sampling select the transactions before and after the balance sheet date, carry out confirmation procedure, test the dispatch note and other supporting documents so to ensure whether the transaction is recorded into the appropriate accounting period. |
4. Other Information
The management of Bingshan Refrigeration & Heat Company (hereinafter referred to asthe “Management”) is responsible for the other information. The other informationcomprises the information included in the Bingshan Refrigeration & Heat Company2021 annual report, but does not include the financial statements and our auditor’sreport thereon.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.In connection with our audit of the financial statements, our responsibility is to read theother information and, in doing so, consider whether the other information is materiallyinconsistent with the financial statements or our knowledge obtained in the audit orotherwise appears to be materially misstated.If, based on the work we have performed, we conclude that there is a materialmisstatement of the other information, we are required to report that fact. We havenothing to report in this regard.
5. Responsibilities of the Management and Those Charged with Governance forthe Financial StatementsThe Management is responsible for the preparation of the financial statements inaccordance with Accounting Standards for Business Enterprises to achieve fairpresentation; and designing, implementing and maintaining internal control which isnecessary to enable that the financial statements are free from material misstatement,whether due to fraud or error.In preparing the financial statements, the Management is responsible for assessingBingshan Refrigeration & Heat Company’s ability to continue as a going concern,disclosing, as applicable, matters related to going concern and using the going concernbasis of accounting unless the Management either intends to liquidate BingshanRefrigeration & Heat Company or to cease operations, or have no realistic alternativebut to do so.Those charged with governance are responsible to overseeing Bingshan Refrigeration &Heat Company’s financial reporting process.
6. Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with
auditing standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are generally considered material if,
individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
During the course of audit in accordance with auditing standards, we exercise
professional judgment and maintain professional skepticism. We also carry out the
following works:
(1) Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsiveto those risks, and obtain audit evidence that is sufficient and appropriate toprovide a basis for our audit. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error, as fraud mayinvolve collusion, forgery, intentional omissions, misrepresentations, or theoverride of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to
design audit procedures that are appropriate in the circumstances, but not forthe purpose of expressing an opinion on the effectiveness of its internal control(this sentence would be deleted in circumstance when we are also responsible toissue an opinion on the effectiveness of internal control in conjunction with theaudit of the financial statements).
(3) Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the Management.
(4) Conclude on the appropriateness of the Management’s use of the going concern
basis of accounting and, based on the audit evidence obtained, whether amaterial uncertainty exists related to events or conditions that may castsignificant doubt on Bingshan Refrigeration & Heat Company’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists,we are required to draw attention in our auditor’s report to the relateddisclosures in the financial statements in accordance with the auditing standardsor, if such disclosures are inadequate, we shall modify our opinion. Ourconclusions are based on the audit evidence obtained up to the date of ourauditor’s report. However, future events or conditions may cause BingshanRefrigeration & Heat Company to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial
statements, and also whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.
(6) Obtain sufficient and appropriate audit evidence with respect to the financial
information of Bingshan Refrigeration & Heat entities or business activities,and issue an audit opinion. We are responsible for guiding, supervising andperforming group audits and take full responsibility for audit opinions.We communicate with those charged with governance regarding, among other matters,the planned scope and timing of the audit and significant audit findings etc., including
any significant deficiencies in internal control that we identify during our audit.We also provide those charged with governance with a statement that we have compliedwith those relevant ethical requirements regarding independence, and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and related safeguards, where applicable.From the matters communicated with those charged with governance, we determinethose matters that were of most significance in the audit of the financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor’s report unless law or regulation prohibited public disclosure about thematter or when, in rare circumstances, we determine that a matter should not becommunicated in our report because the adverse consequences of doing so wouldreasonably be expected to outweigh the public interest benefits of such communication.
| ShineWing Certified Public Accountants LLP | CPA： Lin Li (Engagement Partner) | |
| CPA：Zhang Shizhuo | ||
| China, Beijing | April 22, 2022 |
II. Accounting statement
| Prepared by Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 31 December, 2021 Unit: RMB Yuan |
ITEMS
| ITEMS | 31 December 2021 | 31 December 2020 |
| Current Assets: | ||
| Monetary funds | 522,658,505.79 | 373,445,731.67 |
| Settlement provision | ||
| Loans to banks and other financial institutions | ||
| Financial asset held for trading | ||
| Derivative financial assets | ||
| Notes receivable | 166,430,365.74 | 139,121,037.78 |
| Accounts receivable | 821,548,678.85 | 817,011,955.75 |
| Receivable financing | 43,704,310.38 | 61,737,282.56 |
| Prepayments | 182,701,403.55 | 154,481,509.35 |
| Insurance receivables | ||
| Reinsurance Receivable | ||
| Provision of reinsurance contract reserve receivable | ||
| Other receivables | 60,340,096.45 | 67,527,176.86 |
| including: interest receivable | - | 46,879.68 |
| dividend receivable | 1,003,568.75 | 25,923.75 |
| Financial assets purchased under agreement to resell | ||
| Inventories | 1,014,527,127.82 | 731,658,797.98 |
| Contractual asset | 109,859,658.79 | 91,430,011.60 |
| Held for sale assets | ||
| Non-current assets due within 1-year | 14,990,989.30 | 42,003,576.60 |
| Other current assets | 24,525,076.71 | 23,214,091.44 |
| Total Current Assets | 2,961,286,213.38 | 2,501,631,171.59 |
| Non-Current Assets： | ||
| Loan and payment on other's behalf disbursed | ||
| Debt investment | ||
| Other debt investment | ||
| Long-term receivables | 65,867,973.25 | |
| Long-term equity investment | 1,231,504,533.45 | 1,597,241,363.62 |
| Other equity instrument investment | ||
| Other non-current financial assets | 261,410,664.61 | 239,304,098.83 |
| Investments properties | 120,752,809.61 | 126,288,477.92 |
| Fixed assets | 855,395,405.85 | 891,147,058.82 |
| Construction in process | 38,974,478.45 | 34,254,599.42 |
| Production biological assets | ||
| Oil-gas assets | ||
| Right-of-use assets | 23,934,703.37 | |
| Intangible assets | 142,592,738.10 | 145,442,721.24 |
| Development cost | ||
| Goodwill | 1,750,799.49 | 1,750,799.49 |
| Long-term prepaid expense | 8,088,684.23 | 9,660,538.07 |
| Deferred tax asset | 89,879,574.13 | 68,979,526.11 |
| Other non-current assets | ||
| Total Non-current Assets | 2,774,284,391.29 | 3,179,937,156.77 |
| Total Assets | 5,735,570,604.67 | 5,681,568,328.36 |
Consolidated Balance Sheet (continued)Prepared by Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 31 December, 2021 Unit: RMB Yuan
| ITEMS | 31 December 2021 | 31 December 2020 |
| Current Liabilities: | ||
| Short-term borrowings | 245,937,091.72 | 282,971,600.00 |
| Financial liability held for trading | ||
| Derivative financial liabilities | ||
| Notes payable | 380,033,039.56 | 295,151,372.38 |
| Accounts payable | 919,871,927.53 | 767,267,232.43 |
| Advance received | - | |
| Contractual liability | 499,719,963.40 | 295,100,657.10 |
| Financial assets sold under agreements to repurchase | ||
| Deposits received and hold for others | ||
| Entrusted trading of securities | ||
| Entrusted underwriting of securities | ||
| Employee pay payables | 35,148,782.48 | 31,125,808.94 |
| Taxes and duties payable | 13,514,847.82 | 9,714,194.25 |
| Other payables | 55,284,140.21 | 43,017,466.38 |
| including: interest payable | - | 1,839,166.81 |
| dividend payable | 3,008,156.00 | 533,156.00 |
| Fees and commissions payable | ||
| Amount due to reinsurance | ||
| Held for sale liabilities | ||
| Non-current liabilities due within 1-year | 24,175,388.12 | 37,157,126.41 |
| Other current liabilities | 195,213,206.91 | 152,173,946.30 |
| Total Current Liabilities | 2,368,898,387.75 | 1,913,679,404.19 |
| Non-current Liabilities: | ||
| Insurance contract provision | ||
| Long-term borrowings | 150,000,000.00 | 160,000,000.00 |
| Bonds Payable | - | |
| including: preference share | ||
| perpetual debt | ||
| Lease liability | 5,394,021.14 | |
| Long-term payables | 19,998,913.29 | 14,622,463.75 |
| Long-term employee payables | ||
| Provision | 7,592,239.01 | |
| Deferred income | 106,185,323.82 | 104,457,568.86 |
| Deferred Tax liabilities | 35,596,349.70 | 32,010,364.83 |
| Other non-current liabilities | - | |
| Total Non-current Liabilities | 317,174,607.95 | 318,682,636.45 |
| Total Liabilities | 2,686,072,995.70 | 2,232,362,040.64 |
| Owners Equity(or Shareholders Equity): | ||
| Paid-in capital（Share capital) | 843,212,507.00 | 843,212,507.00 |
| Other equity instrument | ||
| Including:preference share | ||
| perpetual capital securities | ||
| Capital reserve | 720,215,866.78 | 726,768,468.00 |
| Less: Treasury stock | ||
| Other comprehensive income | 2,178,681.73 | 2,501,459.77 |
| Chartered reserve | ||
| Surplus reserves | 809,471,199.64 | 805,525,775.33 |
| △Provision for general risk | ||
| Undistributed profit | 627,764,582.32 | 997,601,577.97 |
| Equity attributable to equity holders of the Company | 3,002,842,837.47 | 3,375,609,788.07 |
| Minority interest | 46,654,771.50 | 73,596,499.65 |
| Total Equity | 3,049,497,608.97 | 3,449,206,287.72 |
| Total Liabilities and Equity | 5,735,570,604.67 | 5,681,568,328.36 |
Legal Representative: Ji Zhijian Chief Financial Official: Wang Jinxiu Person in Charge of Accounting Organization: Li Sheng
Balance Sheet of Parent CompanyPrepared by Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 31 December, 2021 Unit: RMB Yuan
| ITEMS | 31 December 2021 | 31 December 2020 |
| Current Assets: | ||
| Monetary funds | 391,077,589.19 | 208,325,740.71 |
| Tradable financial asset | ||
| Derivative financial assets | ||
| Notes receivable | 61,036,803.62 | 42,858,563.72 |
| Accounts receivable | 408,719,275.78 | 408,625,925.91 |
| Receivable financing | 5,427,828.26 | 5,752,810.30 |
| Prepayments | 57,409,521.75 | 62,620,914.33 |
| Other receivables | 54,222,825.18 | 41,183,397.14 |
| including: interest receivable | - | 46,879.68 |
| dividend receivable | 25,100,920.84 | |
| Inventories | 339,977,048.51 | 255,635,206.96 |
| Contractual assets | 50,916,025.04 | 38,366,253.50 |
| Held for sale assets | ||
| Non-current assets due within 1-year | 13,281,553.63 | 19,488,435.75 |
| Other current assets | 8,871,387.69 | 27,637.13 |
| Total Current Assets | 1,390,939,858.65 | 1,082,884,885.45 |
| Non-Current Assets： | ||
| Debt investment | ||
| Other debt investment | ||
| Long-term receivables | 45,964,783.15 | |
| Long-term equity investment | 1,923,394,225.05 | 2,280,377,981.04 |
| Other equity instrument investment | ||
| Other non-current financial assets | 260,095,522.11 | 237,888,956.33 |
| Investments properties | 95,850,052.41 | 100,762,366.02 |
| Fixed assets | 680,392,162.13 | 721,701,015.39 |
| Construction in process | 28,279,901.38 | 9,160,965.22 |
| Production biological assets | ||
| Oil-gas assets | ||
| Right-of-use assets | 15,636,361.47 | |
| Intangible assets | 73,679,019.01 | 76,619,078.55 |
| Development cost | ||
| Goodwill | ||
| Long-term unamortized expense | 6,766,442.52 | 8,259,220.68 |
| Deferred tax asset | 16,806,287.61 | 13,940,130.98 |
| Other non-current assets | ||
| Total Non-current Assets | 3,100,899,973.69 | 3,494,674,497.36 |
| Total Assets | 4,491,839,832.34 | 4,577,559,382.81 |
Balance Sheet of Parent Company (continued)
Prepared by Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 31 December, 2021 Unit: RMB Yuan
| ITEMS | 31 December 2021 | 31 December 2020 |
| Current Liabilities: | ||
| Short-term borrowings | 230,373,666.72 | 276,011,600.00 |
| Financial liability held for trading | ||
| Derivative financial liabilities | ||
| Notes payable | 238,051,362.81 | 202,747,834.50 |
| Accounts payable | 318,798,749.33 | 254,630,956.73 |
| Advance received | - | |
| Contractual liability | 115,654,933.60 | 67,468,174.27 |
| Employee pay payables | 13,551,313.90 | 11,187,502.65 |
| Taxes and duties payable | 2,667,309.95 | 4,244,948.37 |
| Other payables | 23,508,139.39 | 17,179,194.67 |
| including: interest payable | - | 1,839,166.81 |
| dividend payable | 533,156.00 | 533,156.00 |
| Held for sale liabilities | ||
| Non-current liabilities due within 1-year | 1,918,874.53 | 25,000,034.00 |
| Other current liabilities | 68,871,944.99 | 50,815,558.18 |
| Total Current Liabilities | 1,013,396,295.22 | 909,285,803.37 |
| Non-current Liabilities: | ||
| Long-term borrowings | 150,000,000.00 | 160,000,000.00 |
| Bonds Payable | - | |
| including: preference share | ||
| perpetual debt | ||
| Lease liability | 13,243,055.41 | |
| Long-term payables | ||
| Long-term employee payables | ||
| Provision for liabilities | ||
| Deferred income | 66,992,823.82 | 64,121,068.86 |
| Deferred Tax liabilities | 35,596,349.70 | 32,010,364.83 |
| Other non-current liabilities | ||
| Total Non-current Liabilities | 265,832,228.93 | 256,131,433.69 |
| Total Liabilities | 1,279,228,524.15 | 1,165,417,237.06 |
| Owners Equity(or Shareholders Equity): | ||
| Paid-in capital（Share capital) | 843,212,507.00 | 843,212,507.00 |
| Other equity instrument | ||
| Including:preference share | ||
| perpetual capital securities | ||
| Capital reserve | 755,146,592.54 | 771,270,562.83 |
| Less: Treasury stock | ||
| Other comprehensive income | 1,216,581.06 | 1,539,359.10 |
| Chartered reserve | ||
| Surplus reserves | 809,471,199.64 | 805,525,775.33 |
| Undistributed profit | 803,564,427.95 | 990,593,941.49 |
| Total Equity | 3,212,611,308.19 | 3,412,142,145.75 |
| Total Liabilities and Equity | 4,491,839,832.34 | 4,577,559,382.81 |
Legal Representative: Ji Zhijian Chief Financial Official: Wang Jinxiu Person in Charge of Accounting Organization: Li Sheng
Consolidated Income Statement
Prepared by Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. January- December, 2021 Unit: RMB Yuan
| Item | This year | Last year |
| Ⅰ、Total operating revenue | 2,089,208,256.22 | 1,727,267,935.15 |
| Including: Operating revenue | 2,089,208,256.22 | 1,727,267,935.15 |
| Interest income | ||
| Earned premiums | ||
| Fees and commission income | ||
| Ⅱ、Total cost of operation | 2,248,942,160.16 | 1,767,653,636.63 |
| Including: Cost of operation | 1,849,531,272.29 | 1,432,524,109.91 |
| Interest expenses | ||
| Fees and commission expenses | ||
| Payments to surrenders of insurance contracts | ||
| Net amount of insurance claims expenses | ||
| Net charges of provision for insurance contracts | ||
| Dividends policy expenses | ||
| Reinsurance expenses | ||
| Taxes and surcharges | 18,951,850.96 | 15,456,113.14 |
| Selling and distribution expenses | 130,633,909.30 | 83,740,476.90 |
| Administrative expenses | 170,613,436.15 | 160,295,370.53 |
| R&D | 65,269,765.23 | 49,158,256.78 |
| Financial expenses | 13,941,926.23 | 26,479,309.37 |
| Including: Interest expenses | 16,718,288.26 | 22,795,380.51 |
| Interest income | 5,193,155.75 | 2,435,386.06 |
| add: other income | 10,799,794.83 | 20,104,570.39 |
| investment income (Loss listed with "-") | -47,447,292.15 | 104,437,155.73 |
| Including: income from investments in associates and joint ventures | -58,045,519.63 | 91,883,843.64 |
| amortized cost | ||
| Exchange gain (Loss listed with "-") | ||
| Gain on hedging of net exposure (Loss listed with "-") | ||
| Gain on FV change (Loss listed with "-") | 52,398,565.78 | -14,797,607.68 |
| Loss on impairment of credit(Loss listed with "-") | -90,798,013.99 | -34,717,562.20 |
| Loss on impairment of assets(Loss listed with "-") | -49,626,686.83 | -13,476,398.01 |
| Gain on asset disposal(Loss listed with "-") | 59,272.29 | -169,550.05 |
| Ⅲ、Operating profit (Loss listed with "-") | -284,348,264.01 | 20,994,906.70 |
| Add: Non-operating income | 4,474,706.92 | 1,411,389.75 |
| Less: Non-operating expenses | 9,619,390.42 | 8,141,253.63 |
| Ⅳ、 Total profit (Loss listed with "-") | -289,492,947.51 | 14,265,042.82 |
| Less: Income tax expenses | -14,303,353.47 | -8,584,766.51 |
| Ⅴ、Net profit (Net loss listed with "-") | -275,189,594.04 | 22,849,809.33 |
| (I) Classification by continuity | -275,189,594.04 | 22,849,809.33 |
| 1、Net profit from continuing operation | -275,189,594.04 | 22,849,809.33 |
| 2、Net profit from discontinuing operation | ||
| (II) Classification by ownership | -275,189,594.04 | 22,849,809.33 |
| 1、Net profit attributable to equity holders(shareholders) of the Company | -269,059,849.96 | 21,341,133.39 |
| 2、Minority interest | -6,129,744.08 | 1,508,675.94 |
| Ⅵ、 Other comprehensive income net off tax | - | - |
| Net other comprehensive income net off tax attributable to equity holders(shareholders) of the parent company | - | - |
| (Ⅰ)Items that may not be reclassified subsequently to the income statement | - | - |
| 1.Change in net asset/liability from remeasurment on defined benefit plan | ||
| statement | ||
| 3.FV change of other equity instrument investment | ||
| 4.FV change of own credit risk | ||
| 5.Others | ||
| (Ⅱ)Items that may be reclassified subsequently to the income statement | - | - |
| 1.Under equity method, proportionate share of other comprehensive income invested company that may be reclassified subsequently to the income statement | ||
| 2.FV change of other debt instrument investment | ||
| 3.Financial assets reclassfied into other comprehensive income | ||
| 4.Credit impairment provision of other debt investment | ||
| 5.Cash flow hedges effective portion | ||
| 6.Foreign currency translation difference | ||
| 7.Others | ||
| Net other comprehensive income net off tax attributable to Minority interest | ||
| Ⅶ、Total comprehensive income | -275,189,594.04 | 22,849,809.33 |
| Total comprehensive income attributable to parent Company | -269,059,849.96 | 21,341,133.39 |
| Total comprehensive income attributable to minority interest | -6,129,744.08 | 1,508,675.94 |
| Ⅷ、 Earnings per share | ||
| (Ⅰ)Basic earnings per share | -0.319 | 0.025 |
| (Ⅱ)Diluted earnings per share | -0.319 | 0.025 |
Legal Representative: Ji Zhijian Chief Financial Official: Wang Jinxiu Person in Charge of Accounting Organization: Li Sheng
Income Statement of Parent Company
Prepared by Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. January- December, 2021 Unit: RMB Yuan
| Item | This year | Last year |
| Ⅰ、Operating revenue | 833,501,935.55 | 751,021,670.44 |
| Less: Cost of operation | 737,122,594.46 | 616,299,098.91 |
| Taxes and surcharges | 11,713,347.51 | 8,800,692.80 |
| Selling and distribution expenses | 62,191,872.24 | 41,031,582.10 |
| Administrative expenses | 84,579,442.49 | 77,436,050.28 |
| R&D | 23,153,016.46 | 20,145,122.54 |
| Financial expenses | 11,949,817.04 | 15,362,883.21 |
| Including: Interest expenses | 14,788,914.23 | 15,405,378.98 |
| Interest income | 4,726,261.06 | 1,973,796.92 |
| Add: Other income | 1,854,962.57 | 5,367,222.70 |
| Investment income (Loss listed with "-") | -16,105,494.35 | 115,121,934.09 |
| Including: income from investments in associates and joint ventures | -58,058,060.45 | 92,790,086.32 |
| Gain arising from derecognition of financial asset measured at amortized cost | ||
| Gain on hedging of net exposure (Loss listed with "-") | ||
| Gain on FV change (Loss listed with "-") | 52,398,565.78 | -14,797,607.68 |
| Loss on impairment of credit(Loss listed with "-") | -13,408,727.47 | -5,231,482.28 |
| Loss on impairment of assets(Loss listed with "-") | -12,126,565.07 | -12,846,106.32 |
| Gain on asset disposal(Loss listed with "-") | -399.28 | -706,217.34 |
| Ⅱ、Operating profit (Loss listed with "-") | -84,595,812.47 | 58,853,983.77 |
| Add: Non-operating income | 1,548.54 | 3,900.06 |
| Less: Non-operating expenses | 885,498.38 | 108,725.25 |
| Ⅲ、 Total profit (Loss listed with "-") | -85,479,762.31 | 58,749,158.58 |
| Less: Income tax expenses | 772,605.54 | -5,177,760.99 |
| Ⅳ、Net profit (Net loss listed with "-") | -86,252,367.85 | 63,926,919.57 |
| 1、Net profit from continuing operation | -86,252,367.85 | 63,926,919.57 |
| 2、Net profit from discontinuing operation | ||
| Ⅴ、 Other comprehensive income net off tax | - | - |
| (Ⅰ)Items that may not be reclassified subsequently to the income statement | - | - |
| 1.Change in net asset/liability from remeasurment on defined benefit plan | ||
| 2.Under equity method, proportionate share of other comprehensive income in invested company that may not be reclassified subsequently to the income | ||
| 3.FV change of other equity instrument investment | ||
| 4.FV change of own credit risk | ||
| 5.Others | ||
| (Ⅱ)Items that may be reclassified subsequently to the income statement | - | - |
| 1.Under equity method, proportionate share of other comprehensive income invested company that may be reclassified subsequently to the income statement | ||
| 2.FV change of other debt instrument investment | ||
| 3.Financial assets reclassfied into other comprehensive income | ||
| 4.Credit impairment provision of other debt investment | ||
| 5.Cash flow hedges effective portion | ||
| 6.Foreign currency translation difference | ||
| 7.Others | ||
| Ⅵ、Total comprehensive income | -86,252,367.85 | 63,926,919.57 |
| Ⅷ、 Earnings per share | ||
| (Ⅰ)Basic earnings per share | ||
| (Ⅱ)Diluted earnings per share |
Legal Representative: Ji Zhijian Chief Financial Official: Wang Jinxiu Person in Charge of Accounting Organization: Li Sheng
Consolidated Cash Flow Statement
Prepared by Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. January- December, 2021 Unit: RMB Yuan
| Item | This year | Last year |
| 1. Cash flows from operating activities: | ||
| Cash received from sales of goods and rendering of services | 1,998,747,405.23 | 1,538,738,032.26 |
| Net increase in deposits from customers and inter-banks deposits | ||
| Net increase in loans from central bank | ||
| Net increase in loans from other financial institutions | ||
| Cash receipts of premium of direct insurance contracts | ||
| Net cash received from reinsurance contracts | ||
| Net increase in deposits from insurance policy holders and investment | ||
| Cash receipts of interest, fees and commission | ||
| Net increase in placement from banks and other financial institution | ||
| Net increase in sales and repurchase operations | ||
| Entrusted trading of securities | ||
| Cash received from taxes refund | 21,514,050.68 | 18,519,826.50 |
| Cash received relating to other operating activities | 64,293,089.54 | 82,116,067.91 |
| Sub-total of cash inflows from operating activities | 2,084,554,545.45 | 1,639,373,926.67 |
| Cash paid for goods and services | 1,501,614,080.55 | 1,121,134,021.73 |
| Net increase in loans and disbursement to customers | ||
| Net increase in deposit with central bank and inter-banks | ||
| Cash paid for claims of direct insurance contracts | ||
| Net increase of loans to other banks | ||
| Cash paid for interest, fee and commission | ||
| Cash paid for dividends of insurance policies | ||
| Cash paid to and on behalf of employees | 350,456,810.15 | 314,253,416.05 |
| Payments of taxes and surcharges | 68,388,963.77 | 70,148,337.99 |
| Cash paid relating to other operating activities | 162,576,472.61 | 146,980,578.35 |
| Sub-total of cash outflows from operating activities | 2,083,036,327.08 | 1,652,516,354.12 |
| Net cash flows from operating activities | 1,518,218.37 | -13,142,427.45 |
| 2. Cash flows from investment activities: | ||
| Cash received from return of investments | 1,703,262.34 | 3,196,000.00 |
| Cash received from investments income | 110,699,788.36 | 141,629,646.76 |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 754,551.68 | 1,624,834.60 |
| Net cash received from disposal of subsidiaries and other business units | 211,198,900.00 | 37,744,000.00 |
| Cash received relating to other investing activities | ||
| Sub-total of cash inflows from investing activities | 324,356,502.38 | 184,194,481.36 |
| Cash paid to acquire fixed assets, intangible assets and other long-term assets | 30,695,331.84 | 14,869,095.73 |
| Cash paid for investments | 45,400,000.00 | |
| Net increase in pledged deposits | ||
| Net cash paid to acquire subsidiaries and other business units | ||
| Cash paid relating to other investing activities | ||
| Sub-total of cash outflow from investing activities | 76,095,331.84 | 14,869,095.73 |
| Net cash flows from investing activities | 248,261,170.54 | 169,325,385.63 |
| 3. Cash flows from financing activities | ||
| Cash received from investment absorption | ||
| Including: Cash received by subsidiaries from investment absorpotion of non-controlling interest | ||
| Cash received from loans granted | 263,670,518.89 | 333,531,600.00 |
| Cash received relating to other financing activities | 83,846,329.05 | 56,489,819.37 |
| Sub-total of cash inflows from financing activities | 347,516,847.94 | 390,021,419.37 |
| Cash paid for settlement of borrowings | 336,679,560.00 | 405,812,000.00 |
| Cash paid for dividends, profits appropriation or payments of interest | 24,739,356.41 | 47,142,841.87 |
| Including: Dividens and profits paid to non-controlling interest | ||
| Cash paid relating to other financing activities | 111,987,388.37 | 78,196,961.15 |
| Sub-total of cash outflows from financing activities | 473,406,304.78 | 531,151,803.02 |
| Net cash flows from financing activities | -125,889,456.84 | -141,130,383.65 |
| 4. Effect of changes in foreign exchange rate on cash and cash equivalents | 100,945.31 | -1,601,468.60 |
| 5. Net increase in cash and cash equivalents | 123,990,877.38 | 13,451,105.93 |
| Add: Cash and cash equivalents at beginning of year | 314,978,460.49 | 301,527,354.56 |
| 6. Cash and cash equivalents at end of year | 438,969,337.87 | 314,978,460.49 |
Legal Representative: Ji Zhijian Chief Financial Official: Wang Jinxiu Person in Charge of Accounting Organization: Li Sheng
Cash Flow Statement of Parent CompanyPrepared by Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. January- December, 2021 Unit: RMB Yuan
| Item | This year | Last year |
| 1.Cash flow from operating activities | ||
| Cash receipts from sale of goods or rendering of services | 765,232,022.05 | 697,805,239.15 |
| Refunds of taxes | - | 8,601,797.19 |
| Other cash receipts in operating activities | 25,372,394.89 | 30,807,494.95 |
| Sub-total of cash inflows from operating activities | 790,604,416.94 | 737,214,531.29 |
| Cash payments for goods and services acquired | 570,924,816.02 | 522,795,640.64 |
| Cash payments to and on behalf of employees | 106,175,901.94 | 94,837,857.19 |
| Tax and duties payments | 32,561,028.64 | 38,287,456.09 |
| Other cash payments for operating activities | 53,337,644.37 | 47,268,602.90 |
| Sub-total of cash outflows from operating activities | 762,999,390.97 | 703,189,556.82 |
| Net cash flows from operating activities | 27,605,025.97 | 34,024,974.47 |
| 2.Cash flows from investing activities | ||
| Cash receipts from return of investments | 1,700,000.00 | 2,800,000.00 |
| Cash receipts from investments income | 113,318,424.61 | 144,821,456.80 |
| Net cash receipts from disposal of fixed assets, intangible assets and other long-term assets | - | 972,185.00 |
| Net cash receipts from disposal of subsidiaries and other businesses | 211,198,900.00 | 37,744,000.00 |
| Other cash receipts in investing activities | ||
| Sub-total of cash inflows from investing activities | 326,217,324.61 | 186,337,641.80 |
| Cash payments for acquired fixed assets, intangible assets and other long-term assets | 10,487,613.09 | 10,438,744.28 |
| Cash payments for investment | 54,165,615.00 | 100,000,000.00 |
| Net cash payments for acquisition of subsidiaries and other businesses | ||
| Other cash payments in investing activities | ||
| Sub-total of cash outflows from investing activities | 64,653,228.09 | 110,438,744.28 |
| Net cash flows from investment activities | 261,564,096.52 | 75,898,897.52 |
| 3.Cash flows from financing activities | ||
| Cash received from capital injection | ||
| Cash receipts from borrowings | 227,000,000.00 | 315,011,600.00 |
| Other cash receipts in financing activities | 23,123,472.43 | 743,155.00 |
| Sub-total of cash inflows from financing activities | 250,123,472.43 | 315,754,755.00 |
| Cash paid for settlement of borrowings | 311,478,560.00 | 347,082,000.00 |
| Cash paid for dividends, profits appropriation or payments of interest | 21,455,435.22 | 45,119,746.25 |
| Other cash payments in financing activities | 21,611,560.00 | 23,123,472.43 |
| Sub-total of cash outflows from financing activities | 354,545,555.22 | 415,325,218.68 |
| Net cash flows from financing activities | -104,422,082.79 | -99,570,463.68 |
| 4.Effect of changes in foreign exchange rate on cash and cash equivalents | -16,318.79 | 5,763.51 |
| 5.Net increases in cash and cash equivalents | 184,730,720.91 | 10,359,171.82 |
| Add: the beginning balance of cash and cash equivalent | 185,202,268.28 | 174,843,096.46 |
| 6.The ending balance of cash and cash equivalent | 369,932,989.19 | 185,202,268.28 |
Legal Representative: Ji Zhijian Chief Financial Official: Wang Jinxiu Person in Charge of Accounting Organization: Li Sheng
Consolidated Statement of Changes in Shareholder’s Equity
Prepared by Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2020.01-12 Unit: RMB Yuan
| Item | Current year | ||||||||||||||
| Equity attributable to the equity holders of the Company | Minority interests | Total equity | |||||||||||||
| Paid-up capital (share capital) | Other equity instrument | Capital reserves | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | △General risk provision | Undistributed profits | Others | Sub-total | |||||
| preference share | perpetual bond | others | |||||||||||||
| 1. Balance at end of last year | 843,212,507.00 | - | - | - | 726,768,468.00 | - | 2,501,459.77 | - | 805,525,775.33 | - | 997,601,577.97 | - | 3,375,609,788.07 | 73,596,499.65 | 3,449,206,287.72 |
| Add: Changes in accounting policies | - | ||||||||||||||
| Correction of prior periods errors | - | ||||||||||||||
| Business combination within the same control | - | ||||||||||||||
| Others | -8,839,959.60 | -79,559,636.71 | -88,399,596.31 | -88,399,596.31 | |||||||||||
| 2. Balance at beginning of current year | 843,212,507.00 | - | - | 726,768,468.00 | - | 2,501,459.77 | - | 796,685,815.73 | - | 918,041,941.26 | - | 3,287,210,191.76 | 73,596,499.65 | 3,360,806,691.41 | |
| 3. Increase/ Decrease for current year (Decrease listed with "-") | - | - | - | -6,552,601.22 | - | -322,778.04 | - | 12,785,383.91 | - | -290,277,358.94 | - | -284,367,354.29 | -26,941,728.15 | -311,309,082.44 | |
| （Ⅰ）Total of comprehensive income | -269,059,849.96 | -269,059,849.96 | -6,129,744.08 | -275,189,594.04 | |||||||||||
| （Ⅱ）Capital contribution and reduction | - | - | - | 9,571,369.07 | - | - | - | - | - | - | - | 9,571,369.07 | -18,336,984.07 | -8,765,615.00 | |
| 1.Ordinary share | - | - | |||||||||||||
| 2.Capital contributed by other equity instrument holders | - | - | |||||||||||||
| 3.Share-based payments charged to equity | - | - | |||||||||||||
| 4.Others | 9,571,369.07 | 9,571,369.07 | -18,336,984.07 | -8,765,615.00 | |||||||||||
| （III）Profit appropriations | - | - | - | - | - | - | - | - | 12,785,383.91 | - | -21,217,508.98 | - | -8,432,125.07 | -2,475,000.00 | -10,907,125.07 |
| 1.Appropriation to surplus reserves | 12,785,383.91 | -12,785,383.91 | - | - | |||||||||||
| 2.Appropriation to general risks provision | - | - | |||||||||||||
| 3.Appropriation to equity holders (or shareholders) | -8,432,125.07 | -8,432,125.07 | -2,475,000.00 | -10,907,125.07 | |||||||||||
| 4.Others | - | - | |||||||||||||
| （IV）Transfer within equity | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| 1.Transfer of capital reserve to capital (share capital) | - | - | |||||||||||||
| 2.Transfer of surplus reserves to capital (share capital) | - | - | |||||||||||||
| 3.Surplus reserves making up of losses | - | - | |||||||||||||
| 4.Carried over the change in net asset/liability from remeasurment on defined benefit plan | - | - | |||||||||||||
| 5.Transfer of other comprehensive to retained earnings | - | - | |||||||||||||
| 6.Others | - | - | |||||||||||||
| （V）Special reserves | - | - | - | - | - | - | - | - | - | - | - | - | - | ||
| 1.Provision for special reserve | 3,799,007.87 | 3,799,007.87 | 3,799,007.87 | ||||||||||||
| 2.Utilisation of special reserve | 3,799,007.87 | 3,799,007.87 | 3,799,007.87 | ||||||||||||
| （VI）Others | -16,123,970.29 | -322,778.04 | -16,446,748.33 | -16,446,748.33 | |||||||||||
| 4、Balance at end of current year | 843,212,507.00 | - | - | 720,215,866.78 | - | 2,178,681.73 | - | 809,471,199.64 | - | 627,764,582.32 | - | 3,002,842,837.47 | 46,654,771.50 | 3,049,497,608.97 | |
| Item | Last year | ||||||||||||||
| Equity attributable to the equity holders of the Company | Minority interests | Total equity | |||||||||||||
| Paid-up capital (share capital) | Other equity instrument | Capital reserves | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | △General risk provision | Undistributed profits | Others | Sub-total | |||||
| preference share | perpetual bond | others | |||||||||||||
| 1. Balance at end of last year | 843,212,507.00 | - | - | 726,768,468.00 | - | 2,501,459.77 | - | 768,723,812.53 | - | 1,038,358,782.59 | 3,379,565,029.89 | 74,562,823.71 | 3,454,127,853.60 | ||
| Add: Changes in accounting policies | - | - | |||||||||||||
| Correction of prior periods errors | - | - | |||||||||||||
| Business combination within the same control | - | - | |||||||||||||
| Others | - | - | |||||||||||||
| 2. Balance at beginning of current year | 843,212,507.00 | - | - | 726,768,468.00 | - | 2,501,459.77 | - | 768,723,812.53 | - | 1,038,358,782.59 | - | 3,379,565,029.89 | 74,562,823.71 | 3,454,127,853.60 | |
| 3. Increase/ Decrease for current year (Decrease listed with "-") | - | - | - | - | - | - | - | 36,801,962.80 | - | -40,757,204.62 | - | -3,955,241.82 | -966,324.06 | -4,921,565.88 | |
| （Ⅰ）Total of comprehensive income | 21,341,133.39 | 21,341,133.39 | 1,508,675.94 | 22,849,809.33 | |||||||||||
| （Ⅱ）Capital contribution and reduction | - | - | - | - | - | - | - | - | - | - | - | - | - | - | |
| 1.Ordinary share | - | - | |||||||||||||
| 2.Capital contributed by other equity instrument holders | - | - | |||||||||||||
| 3.Share-based payments charged to equity | - | - | |||||||||||||
| 4.Others | - | - | |||||||||||||
| （III）Profit appropriations | - | - | - | - | - | - | - | - | 36,801,962.80 | - | -62,098,338.01 | - | -25,296,375.21 | -2,475,000.00 | -27,771,375.21 |
| 1.Appropriation to surplus reserves | 36,801,962.80 | -36,801,962.80 | - | - | |||||||||||
| 2.Appropriation to general risks provision | - | - | |||||||||||||
| 3.Appropriation to equity holders (or shareholders) | -25,296,375.21 | -25,296,375.21 | -2,475,000.00 | -27,771,375.21 | |||||||||||
| 4.Others | - | - | |||||||||||||
| （IV）Transfer within equity | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| 1.Transfer of capital reserve to capital (share capital) | - | - | |||||||||||||
| 2.Transfer of surplus reserves to capital (share capital) | - | - | |||||||||||||
| 3.Surplus reserves making up of losses | - | - | |||||||||||||
| 4.Carried over the change in net asset/liability from remeasurment on defined benefit plan | - | - | |||||||||||||
| 5.Transfer of other comprehensive to retained earnings | - | - | |||||||||||||
| 6.Others | - | - | |||||||||||||
| （V）Special reserves | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| 1.Provision for special reserve | 3,239,077.20 | 3,239,077.20 | 3,239,077.20 | ||||||||||||
| 2.Utilisation of special reserve | 3,239,077.20 | 3,239,077.20 | 3,239,077.20 | ||||||||||||
| （VI）Others | - | - | |||||||||||||
| 4、Balance at end of current year | 843,212,507.00 | - | - | 726,768,468.00 | - | 2,501,459.77 | - | 805,525,775.33 | - | 997,601,577.97 | - | 3,375,609,788.07 | 73,596,499.65 | 3,449,206,287.72 | |
Legal Representative: Ji Zhijian Chief Financial Official: Wang Jinxiu Person in Charge of Accounting Organization: Li Sheng
Statement of Changes in Shareholder’s Equity of Parent Company
Prepared by Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd. 2020.01-12 Unit: RMB Yuan
| Item | Current year | |||||||||||
| Paid-up capital (share capital) | Other equity instrument | Capital reserves | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | Undistributed profits | Others | Total equity | |||
| preference share | perpetual bond | others | ||||||||||
| 1. Balance at end of last year | 843,212,507.00 | - | - | - | 771,270,562.83 | - | 1,539,359.10 | - | 805,525,775.33 | 990,593,941.49 | - | 3,412,142,145.75 |
| Add: Changes in accounting policies | - | |||||||||||
| Correction of prior periods errors | - | |||||||||||
| Others | -8,839,959.60 | -79,559,636.71 | -88,399,596.31 | |||||||||
| 2. Balance at beginning of current year | 843,212,507.00 | - | - | 771,270,562.83 | - | 1,539,359.10 | - | 796,685,815.73 | 911,034,304.78 | - | 3,323,742,549.44 | |
| 3. Increase/ Decrease for current year (Decrease listed with "-") | - | - | - | -16,123,970.29 | - | -322,778.04 | - | 12,785,383.91 | -107,469,876.83 | - | -111,131,241.25 | |
| （Ⅰ）Total of comprehensive income | -86,252,367.85 | -86,252,367.85 | ||||||||||
| （Ⅱ）Capital contribution and reduction | - | - | - | - | - | - | - | - | - | - | - | |
| 1.Ordinary share | - | |||||||||||
| 2.Capital contributed by other equity instrument holders | - | |||||||||||
| 3.Share-based payments charged to equity | - | |||||||||||
| 4.Others | - | |||||||||||
| （III）Profit appropriations | - | - | - | - | - | - | - | 12,785,383.91 | -21,217,508.98 | - | -8,432,125.07 | |
| 1.Appropriation to surplus reserves | 12,785,383.91 | -12,785,383.91 | - | |||||||||
| 2.Appropriation to equity holders (or shareholders) | -8,432,125.07 | -8,432,125.07 | ||||||||||
| 3.Others | - | |||||||||||
| （IV）Transfer within equity | - | - | - | - | - | - | - | - | - | - | - | |
| 1.Transfer of capital reserve to capital (share capital) | - | |||||||||||
| 2.Transfer of surplus reserves to capital (share capital) | - | |||||||||||
| 3.Surplus reserves making up of losses | - | |||||||||||
| 4.Carried over the change in net asset/liability from remeasurment on defined benefit plan | - | |||||||||||
| 5.Transfer of other comprehensive to retained earnings | - | |||||||||||
| 6.Others | - | |||||||||||
| （V）Special reserves | - | - | - | - | - | - | - | - | - | - | - | - |
| 1.Provision for special reserve | 3,799,007.87 | 3,799,007.87 | ||||||||||
| 2.Utilisation of special reserve | 3,799,007.87 | 3,799,007.87 | ||||||||||
| （VI）Others | -16,123,970.29 | -322,778.04 | -16,446,748.33 | |||||||||
| 4、Balance at end of current year | 843,212,507.00 | - | - | - | 755,146,592.54 | - | 1,216,581.06 | - | 809,471,199.64 | 803,564,427.95 | - | 3,212,611,308.19 |
| Item | Last year | |||||||||||
| Paid-up capital (share capital) | Other equity instrument | Capital reserves | Less: Treasury shares | Other comprehensive income | Special reserves | Surplus reserves | Undistributed profits | Others | Total equity | |||
| preference share | perpetual bond | others | ||||||||||
| 1. Balance at end of last year | 843,212,507.00 | - | - | - | 771,270,562.83 | 1,539,359.10 | - | 768,723,812.53 | 988,765,359.93 | 3,373,511,601.39 | ||
| Add: Changes in accounting policies | - | |||||||||||
| Correction of prior periods errors | - | |||||||||||
| Others | - | |||||||||||
| 2. Balance at beginning of current year | 843,212,507.00 | - | - | 771,270,562.83 | - | 1,539,359.10 | - | 768,723,812.53 | 988,765,359.93 | - | 3,373,511,601.39 | |
| 3. Increase/ Decrease for current year (Decrease listed with "-") | - | - | - | - | - | - | - | 36,801,962.80 | 1,828,581.56 | - | 38,630,544.36 | |
| （Ⅰ）Total of comprehensive income | 63,926,919.57 | 63,926,919.57 | ||||||||||
| （Ⅱ）Capital contribution and reduction | - | - | - | - | - | - | - | - | - | - | - | |
| 1.Ordinary share | - | |||||||||||
| 2.Capital contributed by other equity instrument holders | - | |||||||||||
| 3.Share-based payments charged to equity | - | |||||||||||
| 4.Others | - | |||||||||||
| （III）Profit appropriations | - | - | - | - | - | - | - | 36,801,962.80 | -62,098,338.01 | - | -25,296,375.21 | |
| 1.Appropriation to surplus reserves | 36,801,962.80 | -36,801,962.80 | - | |||||||||
| 2.Appropriation to equity holders (or shareholders) | -25,296,375.21 | -25,296,375.21 | ||||||||||
| 3.Others | - | |||||||||||
| （IV）Transfer within equity | - | - | - | - | - | - | - | - | - | - | - | |
| 1.Transfer of capital reserve to capital (share capital) | - | |||||||||||
| 2.Transfer of surplus reserves to capital (share capital) | - | |||||||||||
| 3.Surplus reserves making up of losses | - | |||||||||||
| 4.Carried over the change in net asset/liability from remeasurment on defined benefit plan | - | |||||||||||
| 5.Transfer of other comprehensive to retained earnings | - | |||||||||||
| 6.Others | - | |||||||||||
| （V）Special reserves | - | - | - | - | - | - | - | - | - | - | - | - |
| 1.Provision for special reserve | 3,239,077.20 | 3,239,077.20 | ||||||||||
| 2.Utilisation of special reserve | 3,239,077.20 | 3,239,077.20 | ||||||||||
| （VI）Others | - | |||||||||||
| 4、Balance at end of current year | 843,212,507.00 | - | - | - | 771,270,562.83 | - | 1,539,359.10 | - | 805,525,775.33 | 990,593,941.49 | - | 3,412,142,145.75 |
Legal Representative: Ji Zhijian Chief Financial Official: Wang Jinxiu Person in Charge of Accounting Organization: Li Sheng
III. Notes to the accounting statement(All amounts in RMB Yuan unless otherwise stated)
Bingshan Refrigeration & Heat Transfer Technologies Co., Ltd (the “Company”) previouslynamed as Dalian Refrigeration Company Limited, was reorganized and reformed from mainpart of former Dalian Refrigeration Factory. On December 8, 1993, the Company went to thepublic as a listed company at Shenzhen Stock Exchange Market. On March 20, 1998, theCompany successfully went to the public at B share market and listed at Shenzhen StockExchange Market with total share capital of RMB350,014,975.00Yuan.According to the 13
th meeting of the 6
thgeneration of board, extraordinary general meeting for2015 fiscal year and ' Restricted share incentive plan (draft)' , the Company planned tointroduce A ordinary shares to incentive objectives, which was 10,150,000 number of shareswould be granted to 41 share incentive objectives at granted price of RMB5.56Yuan per share.Up to March 12, 2015, the Company received new added share capital ofRMB10,150,000.00Yuan.The general meeting for 2015 fiscal year held on April 21, 2016 approved the profit distributionpolicy for the year of 2015, which agrees the profit distribution based on the total 360,164,975number of shares as share capital, paid share dividend of 5 common shares for every 10 sharesthrough capital reserve. The policy stated above was fully implemented on May 5, 2016, andthe registered capital was altered to 540,247,462.00Yuan.The 17
thmeeting of the 6
th generation of board was held on June 4, 2015 and the 2
ndinterimshareholders’ meeting was held on June 24, 2015, meeting deliberated and passed the proposalof non-public offering of ‘A shares’. China’s Securities Regulatory Commission issued SFClicense [2015]3137 on December 30, 2015, approving that new non-public offering cannotexceeded 38,821,954 numbers of shares. The company implemented the post meetingprocedures for China’s Securities Regulatory Commission, which is regarding adjustment ofbottom price and the number of the shares issued after the implementation of profit distributionpolicy of 2015 in May, 2016, and accordingly revised the upper limit of non-public offering ofshare to58,645,096 number of new ‘A shares’. The company issued the non-public offering of58,645,096 number of ‘A shares’ to 7 investors, and as a result, the total number of shares of theCompany is changed to 598,892,558 shares, and the par value is 1yuan per share and the totalshare capital is 598,892,558.00Yuan.According to the ‘Restricted Share Incentive Plan(draft) of Dalian Refrigeration CompanyLimited for the year of 2016’ and the ‘Proposal regarding the shareholders’ meeting authorizedthe board of directors to implement the Restricted Share Incentive Plan’ approved on the 3
rdprovisional general meeting held on September 13, 2016, the 9
th meeting of the 7
thgeneration ofboard deliberated and passed the ‘Proposal about granting the restricted shares to incentivetargets’ on September 20, 2016 and set September 20
, 2016 as share granted date, and granted
12,884,000 number of restricted shares to 118 incentive targets at granted price of 5.62Yuan pershare. By November 22, 2016, The Company has actually received the newly subscribedregistered share capital of 12,884,000.00Yuan subscribed by incentive targets.On May 19, 2017, the general meeting for 2016 fiscal year was held and profit appropriationscheme for 2016 FY was approved, which was every 10 shares will be increased by 4 sharesthrough capital reserve based on the total 611,776,558 number of shares. After the profitappropriation scheme, the registered capital was changed to RMB856,487,181.00Yuan.On December 28, 2017, The Company held the 3rd extraordinary shareholders meeting in 2017,and reviewed and approved the “Proposal on Repurchasing and Retiring Partially RestrictedStocks of the 2016 Restricted Stock Incentive Plan”. On March 8, 2018, after The Company'srepurchase and cancellation, The Company implemented the corresponding capital reductionprocedures according to law. The registered capital of The Company was changed from856,487,181.00Yuan to 855,908,981.00 Yuan.On May 4, 2018, The Company held the 21
st meeting of the 7
th
Board of Directors, andreviewed and approved the “Proposal on Repurchasing and Retiring Partially Restricted Stocksof the 2015 Restricted Stock Incentive Plan". On June 29, 2018, after The Company'srepurchase and cancellation, The Company implemented the corresponding capital reductionprocedures according to law. The registered capital of The Company was changed from855,908,981.00 Yuan to 855,434,087 .00Yuan.On January 17
th, 2019, the 1
stinterim shareholders’ meeting was held and approved for“Proposal on Termination of the 2016 Restricted Stock Incentive Plan and Repurchasing andRetiring Restricted Stocks Plan”. Up to February 25
th, 2019, The Company has completed therepurchasing and retiring stocks plan, respectively The Company shall perform thecorresponding capital reduction procedures in accordance with the law and the registered capitaldecreased from 855,434,087.00Yuan to 843,212,507.00Yuan.On December 20
th
, 2019, The Company held the 7
th meeting of the 8
thBoard of Directors andapproved to change The Company’s name from Dalian Refrigeration Company Limited toBingshan Refrigeration & Heat Transfer Technologies Co., Ltd.The old address of the Company’s registered office as same as head office is No.888 XinanRoad, Shahekou District, Dalian, China. In 2017, The Company relocated to new factory andchanged its address to No.16 Liaohe East RD, Dalian Economic&Technology DevelopmentZone(‘DDZ’), Dalian China as same as HQ’s address. The parent company of The Company isDalian Bingshan Group Co., Ltd., and there is no ultimate controller regulated by the relevantlaw, regulations and rules.The Company is in industrial manufacturing sector, mainly engaged in industrial refrigeration,refrigerated and frozen food storage, and manufacture and installation of central
air-conditioning and refrigeration equipment. The scope of business includes research anddevelopment, design, manufacture, sale, lease, installation and repair of refrigeration and heatequipment, accessories, spare parts, and energy-saving and environmental protection products;Technical services, technical consultation, technical promotion; Design, construction,installation repair and maintenance of complete sets of refrigeration and air conditioningprojects, mechanical and electrical installation projects, steel structure projects, anti-corrosionand heat preservation works; Rental of premises; Transport of ordinary goods; Propertymanagement; Low temperature storage; Import and export of goods and technologies. (With theexception of projects subject to approval according to law, independently carry out businessactivities according to law with the business license).II. The scope of consolidationThere are 14 entities included in the current consolidated financial statements. This year, entitieswithin the consolidation scope aren’t changed comparing to last year. For the specificinformation of the consolidation scope, see the notes of “VII. The Change of Scope ofConsolidation” and “VIII. The Equity in Other Entities”.III. Financial Statements Preparation Basis
（1） Preparing basis
The Company’s financial statements are prepared on the basis of going concern assumption,according to the actual occurred transactions and events and in accordance with ‘AccountingStandards for Business Enterprises’ and relevant regulations, and also based on the note IV“Significant Accounting Policies and Accounting Estimates”.
（2） Going concern
The Company has the capacity to continually operate within 12 months at least since the end ofreport period, and hasn‘t the major issues impacting on the sustainable operation ability.IV. Significant Accounting Policies and Accounting Estimates
1. Declaration for compliance with accounting standards for business enterprisesThe financial statements are prepared by the Company according to the requirements ofAccounting Standard for Business Enterprise, and reflect the relative information for thefinancial position, operating performance, cash flow of the Company truly and fully.
2. Accounting period
The Company adopts the Gregorian calendar year as accounting period from Jan 1 to Dec 31.
3. Operating cycle
The Company sets twelve months for one operating cycle and as the liquidity criterion for assetsand liability.
4. Functional currency
The Company adopts RMB as functional currency.
5. Accounting for business combination under same control and not under same controlAs an acquirer, the assets and liabilities that the Company obtained in a business combinationunder the same control should be measured on the basis of their carrying amount in theconsolidated financial statements on the combining date. As for the balance between thecarrying amount of the net assets obtained by the combining party and the carrying amount ofthe consideration paid by it, the capital surplus shall be adjusted. If the capital surplus is notsufficient to be offset, the retained earnings shall be adjusted.For a business combination not under same control, the asset, liability and contingent liabilityobtained from the acquirer shall be measured at the fair value on the acquisition date. Thecombination cost shall be the fair value, on the acquisition date, of the assets paid, the liabilitiesincurred or assumed and equity securities issued by the acquirer in exchange for the control ofthe acquire, and sum of all direct expenses(if the combination is achieved in stages, thecombination cost shall be the sum of individual transaction). The difference when combinationcost exceeds proportionate share of the fair value of identifiable net assets of acquire should berecognized as goodwill. If the combination cost is less than proportionate share of the fair valueof identifiable net assets of acquiree, firstly, fair value of identifiable asset, liability orcontingent liability shall be reviewed, and so the fair value of non-monetary assets or equityinstruments issued in the combination consideration , after review, still the combination cost isless than proportionate share of the fair value of identifiable net assets of acquire, the differenceshould be recognized as non-operating income.
6. Method of preparation of consolidated financial statements
All subsidiaries controlled by the Company and structured entities are within the consolidationscope.If subsidiaries adopt different accounting policy or have different accounting period from theparent company, appropriated adjustments shall be made in accordance with the Companypolicy in preparation of the consolidated financial statements.All significant intergroup transactions, outstanding balances and unrealized profit shall beeliminated in full when preparing the consolidated financial statements. Portion of thesubsidiary’s equity not belonging to the parent, profit, loss for the current period, portion ofother comprehensive income and total comprehensive belonging to minority interest, shall bepresented separately in the consolidated financial statements under “minority interest ofequity”, ”minority interest of profit and loss”, “other comprehensive income attributed to
minority interest” and “total comprehensive income attributed to minority interest” title.If a subsidiary is acquired under common control, its operation results and cash flow shall beconsolidated since the beginning of the consolidation period. When preparing the comparativeconsolidated financial statements, adjustments shall be made to relevant items of comparativefigures as regarded that reporting entity established through consolidation has been always theresince the point when the ultimate controlling party starts to have the control.If a business consolidation under common control is finally achieved in stages, consolidationaccounting method shall be disclosed additionally for the period in which the control is obtained.For example, if a business consolidation under common control is finally achieved in stages,when preparing the consolidated financial statements, adjustments shall be made for the currentconsolidation status as if consolidation has always been there since the point when the ultimatecontrolling party starts to control. In preparation of comparative figures, asset and liability of theacquiree shall be consolidated into the Company’s comparative financial statements, but to theextent no earlier than the point when the Company and acquiree are both under ultimate controland relevant items under equity in comparative financial statements shall be adjusted for netasset increased in combination. To avoid the duplicated computation of net asset of acquiree, forlong-term equity investment held by the Company before the consolidation, relevant profit andloss, other comprehensive income and movement in other net asset, recognized for the periodbetween the combination date and later date when original shareholding is obtained and whenthe Company and the acquiree are under common control of same ultimate controlling party,shall be respectively used for writing down the opening balance of retained earnings ofcomparative financial statements and profit and loss for the current period.If a subsidiary is acquired not under common control, its operation results and cash flow shallbe consolidated since the beginning of the consolidation period. In preparation of theconsolidated financial statements, adjustments shall be made to subsidiary’s financial statementsbased on the fair value of its all identifiable assets, liability or contingent liability on theacquisition date.If a business consolidation under non-common control is finally achieved in stages,consolidation accounting method shall be disclosed additionally for the period in which thecontrol is obtained. For example, if a business consolidation not under common control isfinally achieved in stages, when preparing the consolidated financial statements, the acquirershall remeasure its previously held equity interest in the acquiree at its acquisition-date fairvalue and recognize the resulting gain or loss as investment income for the current period. Othercomprehensive income, under equity method accounting rising from the interest held inacquiree in relation to the period before the acquisition, and changes in the value of its otherequity other than net profit or loss, other comprehensive income and profit appropriation shallbe transferred to investment gain or loss for the period in which the acquisition incurs,
excluding the other comprehensive income from the movement on the remeasurement of neasset or liability of defined benefit plan.When the Company partially disposes of the long –term equity investment in subsidiary withoutlosing the control over it, in the consolidated financial statements, the difference, betweendisposals price and respective disposed value of share of net assets in the subsidiary since theacquisition date or combination date, shall be adjusted for capital surplus or share premium, noenough capital surplus, then adjusted for retained earnings.When the Company partially disposes of the long –term equity investment in subsidiary andlose the control over it, in preparation of consolidated financial statements, remaining share ofinterest in the subsidiary shall be remeasured on the date of losing control. Sum of the sharedisposal consideration and fair value of remaining portion of shareholding minus the share ofthe net assets in the subsidiary held based on the previous shareholding percentage since theacquisition date or combination date, the balance of above is recognized as investment gain/lossfor the period and goodwill shall be written off accordingly. Other comprehensive incomerelevant to share investment in subsidiary shall be transferred to investment gain /loss for theperiod on the date of losing control.When the Company partially disposes of the long –term equity investment in subsidiary andlose the control over it by stages, if all disposing transactions are bundled, each individualtransaction shall be seen as a transaction of disposal of a subsidiary by losing control. Thedifference between the disposal price and the share of the net assets in the subsidiary heldbefore the date of losing control, shall be recognize as other comprehensive income until thedate of losing control where it is transferred into investment gain/ loss for the current period.
7. Joint arrangement classification and joint operation accounting
The Company’s joint arrangement includes joint operation and joint venture. For joint operation,The Company as a joint operator shall recognize its own assets and its share of any assets heldjointly, its liabilities and its share of any liabilities incurred jointly, its revenue from the sale ofits share of the output arising from the joint operation, its share of the revenue from the sale ofthe output by the joint operation; and its expenses, including its share of any expenses incurredjointly. When an entity enters into a transaction with a joint operation in which it is a jointoperator, such as a sale or contribution of assets, it is conducting the transaction with the otherparties to the joint operation and, as such, the joint operator shall recognize gains and lossesresulting from such a transaction only to the extent of the other parties’ interests in the jointoperation.
8. Cash and cash equivalent
The cash listed on the cash flow statements of the Company refers to cash on hand and bankdeposit. The cash equivalents refer to short-term (normally with original maturities of three
months or less) and liquid investments which are readily convertible to known amounts of cashand subject to an insignificant risk of changes in value.
9. Translation of foreign currency
(1) Foreign currency transaction
Foreign currency transactions are translated at the spot exchange rate issued by People’s Bankof China (“PBOC”) on the 1
st
day of the month when the transactions incurred. Monetary assetsand liabilities in foreign currencies are translated into RMB at the exchange rate prevailing atthe balance sheet day. Exchange differences arising from the settlement of monetary items arecharged as in profit or loss for the period. Exchange differences of specific borrowings relatedto the acquisition or construction of a fixed asset should be capitalized as occurred, before therelevant fixed asset being acquired or constructed is ready for its intended uses.
(2) Translation of foreign currency financial statements
The asset and liability items in the foreign currency balance sheet should be translated at a spotexchange rate at the balance sheet date. Among the owner’s equity items except “undistributedprofit”, others should be translated at the spot exchange rate when they are incurred. Theincome and expense should be translated at spot exchange rate when the transaction incurs.Translation difference of foreign currency financial statements should be presented separatelyunder the other comprehensive income title. Foreign currency cash flows are translated at thespot exchange rate on the day when the cash flows incur. The amounts resulted from change ofexchange rate are presented separately in the cash flow statement.
10. Financial assets and financial liabilities
The Company shall recognize a financial asset or a financial liability when the Companybecomes party to the contractual provisions of the instrument.
(1) Financial assets
1) Classification, recognition and measurement
The Company shall classify financial assets as measured at amortized cost, fair value throughother comprehensive income or fair value through profit or loss on the basis of both theCompany’s business model for managing the financial assets and the contractual cash flowcharacteristics of the financial asset.A financial asset shall be measured at amortized cost if both of the following conditions are met:
①the financial asset is held within a business model whose objective is to hold financial assetsin order to collect contractual cash flows;②the contractual terms of the financial asset give riseon specified dates to cash flows that are solely payments of principal and interest on theprincipal amount outstanding. At initial recognition, the Company shall measure the financialasset at its fair value and take any transaction costs that are directly attributable to the financial
asset into account. Subsequently the Company shall measure the financial asset at amortizedcost. A gain or loss on a financial asset measured at amortized cost, which isn’t any part ofhedging relationship shall be recognized in profit or loss when the financial asset isderecognized, impaired, involved in foreign exchange or amortized for any difference arisingbetween the initial recognized amount and due amount by applying effective interest method.The financial assets of this category include: receivable, notes receivable and other receivables.A financial asset shall be measured at fair value through other comprehensive income if both ofthe following conditions are met: ①the financial asset is held within a business model whoseobjective is achieved by both collecting contractual cash flows and selling financial assets and
②the contractual terms of the financial asset give rise on specified dates to cash flows that aresolely payments of principal and interest on the principal amount outstanding. At initialrecognition, the Company shall measure this financial asset at its fair value and take anytransaction costs that are directly attributable to the financial asset into account. A gain or losson a financial asset measured at fair value through other comprehensive income, which is notpart of hedging relationship shall be recognized in other comprehensive income apart from again or loss on credit loss, foreign exchange and interest of the financial asset calculated byeffective interest method. Accumulated gain or loss previously in the other comprehensiveincome shall be accounted in the profit or loss account when the financial asset is derecognized.The financial assets of this category include: receivable financing.The Company recognized interest revenue based on effective interest method. Interest revenueshall be calculated by applying the effective interest rate to the gross carrying amount of afinancial asset, except for: ①purchased or originated credit-impaired financial assets. For thosefinancial assets, the Company shall apply the credit-adjusted effective interest rate to theamortized cost of the financial asset from initial recognition. ②financial assets that are notpurchased or originated credit-impaired financial assets but subsequently have becomecredit-impaired financial assets. For those financial assets, the Company shall apply theeffective interest rate to the amortized cost of the financial asset in subsequent reporting periods.The Company designates an investment as fair value measured through other comprehensiveincome if an equity instrument held is not for trading. Once the decision is made, it is anirrevocable election. At initial recognition, the Company shall measure the equity instrumentinvestment not for trading at its fair value and take any transaction costs that are directlyattributable to the financial asset into account. Any other gain or loss (including foreignexchange gain or loss) shall be accounted in other comprehensive income and shall not besubsequently transferred to profit or loss, unless the dividend received is accounted in profit orloss (excluding the recovered investment cost). Accumulated gain or loss previously in the othercomprehensive income shall be out of it and into retained earnings when the financial asset isderecognized.
Apart from classified as the amortized cost financial assets and as fair value through othercomprehensive income financial assets, a financial asset is classified as fair value through profitor loss. At initial recognition, the Company shall measure this financial asset at its fair value andtake any transaction costs that are directly attributable to the financial asset into account. Anygain or loss on FVTPL shall be accounted into profit and loss. The financial assets of thiscategory include: tradable financial asset other non-current financial asset.A financial asset shall be classified as fair value through profit or loss if it is recognizedcontingent consideration through business combination, which is not under same controlsituation.
2) Recognition and measurement of transfer of financial assets
A financial asset is derecognized when any one of the following conditions is satisfied: ①therights to receive cash flows from the asset is terminated, ②the financial asset has beentransferred and the Company transfers substantially all risks and rewards relating to thefinancial assets to the transferee, ③the financial asset has been transferred to the transferee,the Company has given up its control of the financial asset although the Company neithertransfers nor retains all risks and rewards of the financial asset.In the case where the financial asset as a whole qualifies for the derecognition conditions, thedifference between the carrying value of transferred financial asset at the derecognition date andthe sum of the consideration received for transfer and the accumulated amount of changes in fairvalue in respect of the amount of partial derecognition ( financial assets involved in transfermust qualify the following conditions: the financial asset is held within a business model whoseobjective is to hold financial assets in order to collect contractual cash flows; the contractualterms of the financial asset give rise on specified dates to cash flows that are solely payments ofprincipal and interest on the principal amount outstanding) , that was previously recorded underother comprehensive income is transferred into profit or loss for the period.In the case where only part of the financial asset qualifies for derecognition, the carryingamount of financial asset being transferred is allocated between the portions that to bederecognised and the portion that continued to be recognised according to their relative fairvalue. The difference between the amount of consideration received for the transfer and theaccumulated amount of changes in fair value that was previously recorded in othercomprehensive income for the asset partially qualified for derecognition (the financial asset isheld within a business model whose objective is to hold financial assets in order to collectcontractual cash flows; the contractual terms of the financial asset give rise on specified dates tocash flows that are solely payments of principal and interest on the principal amount outstanding)and the above-mentioned allocated carrying amount is charged to profit or loss for the period.
(2) Financial liabilities
1) Classification, basis for recognition and measurement
The company shall classify all financial liabilities as subsequently measured at amortized costby applying effective interest method, except the followings:
①financial liability measured at fair value through profit or loss including tradable financialliability (derivative instrument of financial liability included) and designated as financialliability measured at fair value through profit or loss. They are subsequently measured at fairvalue. The net gain or loss arising from changes in fair value, dividends and interest paid relatedto such financial liabilities are recorded in profit or loss for the period in which they areincurred.
② financial assets transfers that do not qualify for derecognition or financial liability is formedfrom continuing involvement in transferred assets. This type of liability shall be measured inaccordance with the financial assets transfer standard.
③ financial guarantee contract not in the above category of ①or ② and loan commitmentwhich is not in the category ① at the below the market loan rate.After initial recognition, the Company as an issuer of such a contract shall subsequentlymeasure it at the higher of: the amount initially recognized less the cumulative amount ofincome recognized in accordance with the revenue standards and the amount of the lossallowance determined in accordance with the financial instrument impairment standard.The Company shall account the financial liability as it measured at fair value through profit orloss if the financial liability is formed by contingent consideration recognized by the buyerthrough business combination that is not under common control.
2) Financial liability derecognition
A financial liability is derecognized when the underlying present obligations or part of it aredischarged. Existing financial liability shall be derecognized and new financial liability shall berecognized when the Company signs the agreement with creditor to undertake the new financialliability in replacement of existing financial liability, and the terms of agreement are different insubstance. Any significant amendment to the agreement as a whole or part o it is made, then theexisting liabilities or part of it shall be derecognized and financial liability after termsamendment shall be recognized as a new financial liability. The difference between the carryingamount of the financial liability derecognized and the consideration paid is recognized in profitor loss for the period.
(3) Fair value measurement of financial asset and financial liability
The Company uses the price in the primary market for financial assets and liability fair valuemeasurement, if no primary market exists, the price in the most advantageous market shall beused for fair value measurement and applicable valuation techniques which enough data is
available for and supported by other information shall be adopted. Input for fair valuemeasurement has 3 levels: level 1 input is the unadjusted quoted price for identical asset orliability available at the active market on the measurement date; level 2 input is the directly orindirectly observable input for relevant asset or liability apart from level 1 input; level 3 input isthe unobservable input for relevant asset or liability.
(4) Financial asset and financial liability offset
Financial asset and financial liability shall be presented in the balance sheet separately andcannot be offset, unless the following conditions are all met: ①the Company has the legal rightto recognized offset amount and the right is enforceable. ②the Company plans to receive or alegal obligation to pay cash at net amount.
(5) Distinguishment between financial liability and equity instrument and accountingFinancial liability and equity instrument shall be distinguished in accordance with the followingstandards: ① if the Company cannot unconditionally avoid paying cash or financial asset tofulfil a contractual obligation, the contractual obligation is qualified or financial liability. Forcertain financial instrument, although there are no clear terms and conditions to includeobligation of paying cash or other financial liability, contractual obligation may indirectly beformed through other terms and conditions. ② the Company’s own equity instrument shall alsobe considered whether it is the substitute of cash, financial asset or it is the remaining equity,after the issuer deducts liability, enjoyed by the equity holder , if it must or can be used to settlea financial asset. If the former, the instrument is a financial liability of the issuer, otherwise it isan equity instrument of the issuer. In certain circumstances, financial instrument contract isclassified as financial liability, if financial instrument contract specifies the Company must orcan use its own equity to settle the financial instrument, the contractual amount of right orobligation equals to that of the numbers of own equity instrument available or to be paidmultiplied by fair value when settling, nevertheless the amount is fixed, or varied partially orfully based on the its own equity’s market price(such as interest rate, certain commodity’s orfinancial instrument’s price variance).When classifying a financial instrument (or its component) in the consolidated statements, theCompany takes all terms and conditions agreed by the Company member and instrument holderinto consideration. If the Company due to the instrument, as a whole, bears settlementobligation by paying cash, other financial asset or other means resulted in financial liability, theinstrument shall be classified as financial liability.If a financial instrument or its component is financial liability, any gain or loss, interest,dividend, and any gain or loss from buy back or refinancing shall be accounted in profit or loss.If a financial instrument or its component is an equity instrument, when it was issued (includingrefinancing), bought back, sold or withdrawn, any change shall be regarded as equity change
and no fair value change shall be recognized.
(6) Financial asset impairment
Based on expected credit loss, the Company shall apply the impairment requirements for therecognition and measurement of a loss allowance for the followings: ① a financial assetmeasured at amortized cost; ② a financial asset measured at FVTOCI(the financial asset isheld within a business model whose objective is achieved by both collecting contractual cashflows and selling financial assets and the contractual terms of the financial asset give rise onspecified dates to cash flows that are solely payments of principal and interest on the principalamount outstanding.); ③ lease receivable; ④ a contractual asset.Expected credit loss is the weighted average of credit losses with the respective risks of adefault occurring as the weights. A credit loss herein is referred to as the present value, atoriginal effective rate, of the difference between the contractual cash flows that are due to theCompany under the contract; and the cash flows that the Company expects to receive, that's thepresent value of the total cash shortage.The Company shall always measure the loss allowance at an amount equal to lifetime expectedcredit losses for the following items: ①receivables or contract assets originated from tradewithin regulation of Accounting Standard for Business Enterprises No. 14 – Revenue, regardlessany significant financing component is contained. ②Receivable of finance lease payment ③receivable of operating lease payment.Apart from the above items, other financial assets shall be assessed for impairment lossallowance ①if the credit risk on a financial instrument has not increased significantly sinceinitial recognition, the Company shall measure the loss allowance for that financial instrumentat an amount equal to 12?month expected credit losses. ②if there have been significantincreases in credit risk, the Company shall measure the loss allowance for a financial instrumentat an amount equal to the lifetime expected credit losses, at the reporting date. ③ if purchasedor originated financial asset is impaired, the Company shall measure the loss allowance for afinancial instrument at an amount equal to the lifetime expected credit losses, at the reportingdate.For a financial asset measured at FVTOCI(the financial asset is held within a business modelwhose objective is achieved by both collecting contractual cash flows and selling financialassets and the contractual terms of the financial asset give rise on specified dates to cash flowsthat are solely payments of principal and interest on the principal amount outstanding.) , theCompany shall apply the impairment requirements for the recognition and measurement of aloss allowance for financial assets that are measured at fair value through other comprehensiveincome. However, the loss allowance shall be recognized in other comprehensive income,impairment loss or gain shall be accounted into profit and loss and shall not reduce the carryingamount of the financial asset in the statement of financial position. Credit loss allowance
increase or reverse for financial instrument other than a financial asset measured at FVTOCIshall be accounted into profit and loss as impairment loss or gain.
1) Assessment of significant increase in credit risk
At each reporting date, the Company shall assess whether the credit risk on a financialinstrument has increased significantly since initial recognition. To make that assessment, theCompany shall compare the risk of a default occurring on the financial instrument as at thereporting date with the risk of a default occurring on the financial instrument as at the date ofinitial recognition. However, the Company may assume that the credit risk on a financialinstrument has not increased significantly since initial recognition if the financial instrument isdetermined to have low credit risk at the reporting date. In general, if the contractual paymentsare more than 30 days past due, it indicates the increase in the credit risk unless reasonable andsupportable information , which is available without undue cost or effort to indicate nosignificant increases in credit risk since initial recognition, even though the contractualpayments are more than 30 days past due. The Company considers reasonable and supportableinformation, that is available without undue cost or effort including forward looking.If in the aspect of individual instrument, the Company can't obtain sufficient evidence aboutcredit risk increased significantly at a reasonable cost, but portfolio evaluation is feasible, theCompany will group the instruments and assess whether the credit risk increased significantlybased on the portfolio in accordance with the common characteristics of credit risk of financialinstrument.
2) Measurement of expected credit losses
The Company shall measure expected credit losses of a financial instrument in a way thatreflects: ①an unbiased and probability?weighted amount that is determined by evaluating arange of possible outcomes; ② the time value of money; and ③reasonable and supportableinformation that is available without undue cost or effort at the reporting date about past events,current conditions and forecasts of future economic conditions.The Company determines the credit loss of lease receivable and financial guarantee contractsbased on the individual asset or contract.The Company determines the expected credit loss of trade receivable and contract asset on thebasis of portfolios, which are considered by expected credit loss measurement reflection, byreference to historical experience of credit loss and by comparison of receivable past due days/receivable age with default risk rate, unless the single credit loss is separately recognized forcontractual payments that is significant in amount and credit impaired.The Company determines the expected credit loss of a financial asset measured at FVTOCI(thefinancial asset is held within a business model whose objective is achieved by both collectingcontractual cash flows and selling financial assets and the contractual terms of the financial
asset give rise on specified dates to cash flows that are solely payments of principal and intereston the principal amount outstanding.) and a financial asset measured at amortized cost on thebasis of portfolio unless the single credit loss is separately recognized for contractual paymentsthat is significant in amount and credit impaired.The Company groups the financial instruments based on the portfolio in accordance with thecommon characteristics of credit risk which involves type of financial instrument, credit riskgrade, geographic location and industry of debtors.The Company measures the expected credit loss on financial instrument based on thefollowings:
①financial asset, credit loss is the present value of difference between the receivable ofcontracted cashflow and expected cashflow.
②lease receivable, credit loss is the present value of difference between the receivable ofcontracted cashflow and expected cashflow. Cash flow used for measurement of credit loss isconsistent with the cash flow used for lease receivable in accordance with leasing standard.The Company adopts simplified approach for trade receivables, contract assets that do notcontain a significant financing component, and shall always measure the loss allowance at anamount equal to lifetime expected credit losses.Impairment requirements is to assess whether credit risk has been significantly increased sinceinitial recognition at each reporting date, if there have been significant increases in credit risk,the Company shall measure the loss allowance for a financial instrument at an amount equal tothe lifetime expected credit losses, at the reporting date, if the credit risk on a financialinstrument has not increased significantly since initial recognition, the Company shall measurethe loss allowance for that financial instrument at an amount equal to 12?month expected creditlosses.When assessing expected credit losses, the Company considers all reasonable and supportableinformation, including that which is forward-looking.The Company shall measure expected credit losses of a financial instrument in a way thatreflects: an unbiased and probability?weighted amount that is determined by evaluating a rangeof possible outcomes; The time value of money; and reasonable and supportable informationthat is available without undue cost or effort at the reporting date about past events, currentconditions and forecasts of future economic conditions.The Company directly lowers the book value of the financial asset when contractual cash flowcannot be fully or partially recollected within rational expectation any longer.The Company also assesses the expected credit loss of financial asset measured at amortizedcost based on age portfolio, other than past due credit loss assessment based on individual item.
11. Provision for Impairment of Trade receivables
The Company’s receivables include notes receivable, receivable, receivable expected credit lossrecognition and accounting.
（1） Recognition of provision for impairment
On the basis of expected credit loss, the Company always measures the loss allowance at anamount equal to lifetime expected credit losses for trade receivables which do not contain asignificant financing component and are generated in accordance with No 14-Revenue Standardof Accounting Standard for Business Enterprise. For trade receivables which do contain asignificant financing component, the Company chooses as its accounting policy to measure theloss allowance at an amount equal to lifetime expected credit losses.If the receivable is generated from transactions in accordance with No14-Revenue Standard anddespite any significant financing component is contained or not, it shall be measured for the lossallowance at an amount equal to lifetime expected credit losses.
（2） Expected credit loss risk portfolio assessment method based on portfolioThe Company separately assesses the credit risk of financial assets which have significantlydifferent the credit risk, such as receivable with dispute or involved in litigation and arbitration;There are clear signs indicating the debtor is unlikely to fulfill the repayment obligations of thereceivables or the receivables with significantly different credit risk due to contacted repaymentetc.Apart from the financial asset to be assessed for credit risk separately, the Company divides thefinancial assets into different group based on common characteristics of risk and assesses therisk based on the portfolio.
①Notes receivable
Based on the acceptor credit risk of notes receivable as the common risk characteristics, it isdivided into different categories and determined for expected credit loss accounting estimatepolicy.
| Portfolio category | Expected credit loss accounting estimate policy |
| Bank acceptance note portfolio | Lower credit risk assessed by the management, no expected credit loss recognition |
| Commercial acceptance note portfolio | Same as receivables portfolio and provided for excepted credit loss allowance based on expected credit loss rate |
②Trade receivables and other receivables
Apart from the trade receivables and other receivables to be assessed for credit risk separately,based on the counterparty as the common risk characteristics, it is divided into differentcategories and determined for expected credit loss accounting estimate policy.
| Portfolio category | Expected credit loss accounting estimate policy |
| Related parties portfolio within the consolidation | Lower credit risk assessed by the management, no expected credit loss recognition |
| Other related parties and non-related parties portfolio | Excepted credit loss rate for allowance |
The Company prepares the comparison table between receivables aging and expected credit lossrate within lifetime and work out the expected credit loss by reference to historical credit lossexperience in combination with current situation and future forecast of economy condition.The Company shall measure expected credit losses of a financial instrument in a way thatreflects: an unbiased and probability?weighted amount that is determined by evaluating a rangeof possible outcomes; The time value of money; and reasonable and supportable informationthat is available without undue cost or effort at the reporting date about past events, currentconditions and forecasts of future economic conditions.The Company prepares the comparison table between receivables aging and fixed provision rateand work out the expected credit loss by reference to historical credit loss experience.On the balance sheet date, expected credit loss of receivable shall be calculated. If the expectedcredit loss is larger than the book value of the provision of receivable impairment, the differenceshall be recognized as receivable impairment loss, debit to “credit impairment loss”, credit to“provision for bad debt”. Alternatively, the difference is recognized as impairment gain andreversed journal entry shall be made.Actually incurred credit loss shall be debit to “provision for bad debt”, credit to “notesreceivable”, “receivable”, “other receivable” based on the approved amount to be written off asit is assured as uncollectible receivable. If the amount to be written off is bigger than theprovision for impairment loss, the difference is debit to “credit impairment loss”
12. Receivable financing
During the liquidity management of the Company, majority of the bill receivables is endorsed ordiscounted prior to the bill due date and endorsed or discounted bill receivables arederecognized after the all risks and rewards have been transferred to the counter party. Thebusiness model for managing bill receivables is not only for collecting contractual cash flowsbut also for selling the financial assets as its objective, therefore it is classified as financialassets that are measured at fair value through other comprehensive income
13. Other receivable
Other receivable shall be measured based on the followings:① the credit risk on a financialasset has not increased significantly since initial recognition, the Company shall measure theloss allowance at an amount equal to 12?month expected credit losses.② there have beensignificant increases in credit risk, the Company shall measure the loss allowance for a financial
instrument at an amount equal to the lifetime expected credit losses. ③purchased or originatedcredit-impaired financial assets, the Company shall measure the loss allowance for a financialinstrument at an amount equal to the lifetime expected credit losses.Assessment is based on the portfolio. The Company is unable to obtain the sufficient evidenceon the credit risk significant increase at the rational cost at individual instrument level, but it isfeasible to assess whether the credit risk increased significantly based on the portfolio.Therefore, the Company groups the other receivable for credit risk increase assessment based onthe common risk characteristic such as age, nature and the industry in which debtors are.
14. Inventories
Inventories are materials purchasing, raw material, low-valuable consumable, materialsprocessed on commission, working-in-progress, semi-finished goods, variance of semi-finishedgoods, and finished goods, etc.The inventories are processed on perpetual inventory system, and are measured at their actualcost on acquisition. Weighted average cost method is taken for measuring the inventorydispatched or used. Low value consumables and packaging materials is recognized in theincome statement by one-off method.After year-end thorough inventory check, at the balance sheet date inventory impairment shouldbe provided or adjusted according to inventory category. For the finished goods, raw materialheld for sale and work-in-progress etc which shall be sold directly, the net realizable valueshould be confirmed at the estimated selling price less estimated selling expenses and related taxand expenses. The raw material held for production, its realizable value should be confirmed atthe estimated selling price of finished goods less estimated cost of completion, estimated sellingexpenses and related tax.
15. Contract asset
(1) Recognition and criterion
Contract asset is an entity’s right to consideration in exchange for goods or services that theentity has transferred to a customer when that right is conditioned on something other than thepassage of time. For example, the Company sold two goods that can be clearly distinguished tothe client, then the Company has the right to consideration in exchange of the goods becauseone of the goods are delivered, but the consideration’s collection is conditioned on the othergoods delivery, in this case, the right to consideration shall be recognized as contract asset.
(2) Expected credit loss recognition and accounting of contract asset
Expected credit loss recognition of contract asset is referred to the Note XI. Provision forImpairment of Trade receivables.
On the balance sheet date, expected credit loss of contract asset shall be calculated and thedifference shall be recognized as the impairment loss if the loss figure worked out is bigger thanthe carrying amount of the provision for impairment of contract asset, and debit “assetimpairment loss”, credit “provision for impairment of contract asset”. On the contrary, theCompany shall recognize the difference as impairment profit and keep the opposite accountingrecord.If the actual credit loss incurred and the contract asset is unable to be collected withconfirmation, after the approval is given, the loss shall be written off based on the approvedamount and debit “provision for impairment of contract asset”, credit “contract asset”. If theamount to be written is greater than the provision, the difference shall be debited to “assetimpairment loss”.
16. Contract cost
(1) Assets recognition methods in relation to contract cost
Assets relevant to contract cost in the Company include cost to fulfill the contract and cost toobtain a contract.If the costs incurred in fulfilling a contract with a customer are not within the scope of anotherStandard, an entity shall recognize an asset from the costs incurred to fulfill a contract only ifthose costs meet all of the following criteria: the costs relate directly to a contract or to ananticipated contract, including direct labor, direct materials and overheads which is clearlystated to be borne by the client and any other cost in line with the contract; the costs enhanceresources of the entity that will be used in performance obligations in the future; and the costsare expected to be recovered.An entity shall recognize an asset as the incremental costs of obtaining a contract with acustomer if the entity expects to recover those costs. an entity may recognize the incrementalcosts of obtaining a contract as an expense when incurred if the amortization period of the assett is one year or less. The incremental costs of obtaining a contract are those costs that an entityincurs to obtain a contract with a customer that it would not have incurred if the contract had notbeen obtained (for example, a sales commission). Costs to obtain a contract that would havebeen incurred rather than the incremental cost expected to be recovered shall be recognized asan expense when incurred, unless those costs are explicitly chargeable to the customerregardless of whether the contract is obtained
(2) Amortization of asset relevant to contract cost
An asset recognized in accordance with contract cost shall be amortized on a systematic basisthat is consistent with the transfer to the customer of the goods or services to which the assetrelates.
(3) Impairment of asset relevant to contract cost
When determining the impairment loss of the assets related to the contract cost, the Companyshall firstly determine the impairment loss of the assets related to the contract that arerecognized in accordance with the other accounting standards. If the book value of the asset ishigher than the remaining consideration expected to be obtained by the Company for thetransfer of the goods related to the asset and the estimated cost to be incurred for the transfer ofthe goods related to the asset, the excess part shall be withdrawn as an impairment provision andrecognized as an impairment loss of the asset.An entity shall recognize in profit or loss a reversal of some or all of an impairment losspreviously recognized when the impairment conditions no longer exist or have improved. Theincreased carrying amount of the asset shall not exceed the amount that would have beendetermined (net of amortization) if no impairment loss had been recognized previously.
17.Long-term receivable
Refer to 10. (6) Impairment of financial assets.
18. Long-term equity investment
Long term equity investments are the investment in subsidiary, in associated company and injoint venture.Joint control is the contractual agreement sharing of control over an economic activity by allparticipants or participants’ combination and decisions or policies relating to the operatingactivity of the entity require the unanimous consent of the parties sharing the control.Significant influence exists when the entity directly or indirectly owned 20% or more but lessthan 50% shares with voting rights in the investee company. If holding less than 20% votingrights, the entity shall also take other facts or circumstances into accounts when judging anysignificant influences. Factors and circumstances include: representation on the board ofdirectors or equivalent governing body of the investee, participation in financial or operatingactivities policy-making processes, material transactions between the investor and the investee,interchange of managerial personnel or provision of essential technical information.When control exists over an investee, the investee is a subsidiary of an entity. The initialinvestment cost for long-term equity investment acquired through business combination undercommon control, is the carrying amount presented in the consolidated financial statements ofthe share of net assets at the combination date in the acquired company. If the carrying amountof net assets at the combination date in the acquired company is negative, investment shall berecognized at zero.If the equity of investee under common control is acquired by stages and business combinationincurs in the end, an entity shall disclose the accounting method for long-term equity investmentin the parent financial statement as a supplemental. For example, if the equity of investee undercommon control is acquired by stages and business combination incurs in the end, and it’s a
bundled transaction, the entity shall regard all transactions as a one for accounting. If it’s not abundled transaction, the carrying amount presented in the consolidated financial statements ofthe share of net assets at the combination date in the acquired company since acquisition isdetermined as for the initial cost of long-term equity investment. The difference between thecost initially recognized and carrying amount of long-term equity investment prior to thebusiness combination plus the newly paid consideration for further share acquired, and capitalreserve shall be adjusted accordingly. If no enough capital reserve is available for adjustment,retain earnings shall be adjusted.If long-term equity investment is acquired through business combination not under commoncontrol, initial investment cost shall be the combination cost.If the equity of investee not under common control is acquired by stages and businesscombination incursion the end, an entity shall disclose the accounting method for long-termequity investment in the parent financial statement as a supplemental. If the equity investmentof investee not under common control is acquired by stages and business combination incursionthe end, and it’s a bundled transaction, the entity shall regard all transactions as a one foraccounting. If it’s not a bundled transaction, the carrying amount of the equity investment heldpreviously plus newly increased investment cost are taken as the initial investment cost undercost model. If equity investment is held under equity method before the acquisition date, othercomprehensive income under equity method previously shall not be adjusted accordingly. Whendisposing of the investment, the entity shall adopt the same basis as the investee directlydisposing of related assets or liability for accounting treatment. Prior to acquisition date, if theshare is designated as non-tradable equity instrument measured at FV through othercomprehensive income, the accumulated change on fair value previously recorded in othercomprehensive can not be transferred into current profit and loss.Apart from the long-term equity investments acquired through business combination mentionedabove, the cost of investment for the long-term equity investments acquired by cash payment isthe amount of cash paid. For long-term equity investment acquired by issuing equityinstruments, the cost of investment is the fair value of the equity instrument issued. Forlong-term equity investment injected to the entity by the investor, the investment cost is theconsideration as specified in the relevant contract or agreement.The Company adopts cost method to account for investment in subsidiary and equity method forinvestment in joint venture and affiliate.Long-term equity investment subsequently measured under cost model shall increase thecarrying amount of investment by adjusting the fair value of additional investment and relevanttransaction expenses. Cash dividend or profit declared by investee shall be recognized asinvestment gain/loss for the period based on the proportion share in the investee.
Long-term equity investment subsequently measured under equity method shall be adjusted forits carrying amount according to the share of equity increase or decrease in the investee. Theentity shall recognize its share of the investee’s net profits or losses based on the fair value ofthe investee’s individual identifiable assets at the acquisition date, after making appropriateadjustments thereto in conformity with the accounting policies and accounting period, andoffsetting the unrealized profit or loss from internal transactions entered into between the entityand its associates and joint ventures according to the shareholding attributable to the entity andaccounted for as investment income and loss based on such basis.On disposal of a long-term equity investment, the difference between the carrying value and theconsideration actually received is recognized as investment income for the period. Forlong-term investments accounted under equity method, other comprehensive income recordedshall be accounted on the same basis as the investee directly disposing of related assets orliability when equity method is not used any longer. The movements of shareholder’s equity,other than the net profit or loss, other comprehensive income and profit distribution previouslyrecorded in the shareholder’s equity of the Company are recycled to investment income for theperiod on disposal.Where the entity has no longer joint control or significant influence in the investee company asa result of partially disposal of the investment, the remaining investment will be accounted forin line with the Recognition and Measurement of Financial Instruments Standard -No 22 ofAccounting Standards for Business Enterprises(No7 Caikuai [2017]), and the differencebetween the fair value of remaining investment at the date of losing joint control or significantinfluence and its carrying amount shall be recognized in the profit or loss for the year. Othercomprehensive income recognized from previous equity investment under equity model shall beaccounted for and carried over on the same basis as the investee directly disposing of relatedassets or liability when stopping using under equity model. The movements of shareholder’sequity, other than the net profit or loss, other comprehensive income and profit distributionpreviously recorded in the shareholder’s equity of the Company are recycled to investmentincome for the period on disposal.Where the entity has no longer control over the investee company as a result of partiallydisposal of the investment, the remaining investment will be changed to be accounted for usingequity method providing remaining joint control or significant influence over the investeecompany. The difference between carrying amount of disposed investment and considerationreceived actually shall be recognized in the profit and loss for the period as investment gain orloss, and investment shall be adjusted accordingly as if it was accounted for under equity modelsince acquisition. Where the entity has on longer joint control or significant influence in theinvestee as a result of disposal, the investment shall be changed to be accounted for inaccordance with the Recognition and Measurement of Financial Instruments Standard -No 22 of
Accounting Standards for Business Enterprises(No7 Caikuai [2017]), and difference betweenthe carrying amount and disposal consideration shall be recognized in profit and loss for theperiod, and the difference between the fair value of remaining investment at the date of losingcontrol and its carrying amount shall be recognized in the profit or loss for the year asinvestment gain or loss.If the entity loses its control through partially disposal of investment by stages and it’s not abundled transaction, the entity shall account for all transactions separately. If it’s a bundledtransaction, the entity shall regard all transactions as one disposal of subsidiary by losing control,but the difference between disposal consideration and carrying amount of the equity investmentdisposed prior to losing control, which arises from each individual transaction shall berecognized as other comprehensive income until being transferred into profit and loss for theperiod by the time of losing control.
19. Investment property
The investment property includes property and building and measured at cost model
| Category | (years) | Estimated net residual value rate (%) | Annual depreciation rate |
| Housing and Buildings | 40 | 3% | 2.43% |
20. Fixed assets
Recognition criteria of fixed assets: defined as the tangible assets which are held for thepurpose of producing goods, rendering services, leasing or for operation & management, andhave more than one year of useful life.Fixed assets shall be recognized when the economic benefit probably flows into the Companyand its cost can be measured reliably. Fixed assets include: building, machinery,transportation equipment, electronic equipment and others.All fixed assets shall be depreciated unless the fixed assets had been fully depreciated and arestill being used and land is separately measured. Straight-line depreciation method is adoptedby the Company. Estimated net residual value rate, useful life, depreciation rate as follows:
| No | Category | (years) | Estimated net residual value rate (%) | Annual depreciation rate |
| 1 | Housing and Buildings | 20-40 | 3%,5%,10% | 2.25-4.85% |
| 2 | Machinery equipment | 10-22 | 3%,5%,10% | 4.09-9.7% |
| 3 | Transportation equipment | 4-15 | 3%,5%,10% | 6-24.25% |
| 4 | Electronic equipment | 5 | 3%,5%,10% | 18-19.4% |
| 5 | Others equipment | 10-15 | 3%,5%,10% | 6-9.7% |
The Company should review the estimated useful life, estimated net residual value anddepreciation method at the end of each year. If any change has occurred, it shall be regardedas a change in the accounting estimates.
21. Construction in progress
Constructions in progress are carried down to fixed assets based on the construction budgetand actual costs on the date when completing and achieving estimated usable status, and thefixed assets should be withdrawn deprecation in the next month. Adjustment will beconducted upon confirmation of their actual values after implementing the completion andsettlement procedures.
22. Borrowing costs
The borrowing costs incurred which can be directly attribute to the fixed assets, investmentsproperties, inventories requesting over 1 year purchasing or manufacturing so to come intothe expected condition of use or available for sale shall start to be capitalized whenexpenditure for the assets is being occurred, borrowing cost has occurred, necessaryconstruction for bringing the assets into expected condition for use is in progress. Theborrowing costs shall stop to be capitalized when the assets come into the expected conditionof use or available for sale. The borrowing costs subsequently incurred should be recordedinto profit and loss when occurred. The borrowing costs should temporarily stop beingcapitalized when there is an unusual stoppage of over consecutive 3 months during thepurchase or produce of the capitalized assets, until the purchase or produce of the assetrestart.The borrowing costs of special borrowings, deducting the interest revenue of unusedborrowings kept in the bank or the investment income from transient investment should becapitalized. The capitalized amount of common borrowings should be calculated as follows:
average assets expenditure of the accumulated assets expenditure excesses the specialborrowing, multiplied by the capital rate. The capital rate is the weighted average rate of thecommon borrowings.
23. Right-of-use assets
An asset that represents a lessee’s right to use an underlying asset for the lease term.
（1） Initial recognition
At the commencement date, a lessee shall measure the right-of-use asset at cost.The cost of the right-of-use asset shall comprise:
① the amount of the initial measurement of the lease liability,
② any lease payments made at or before the commencement date, less any lease incentivesreceived, which is the incremental cost for the lease
③ any initial direct costs incurred by the lessee which is the incremental cost
④ an estimate of costs to be incurred by the lessee in dismantling and removing theunderlying asset, restoring the site on which it is located or restoring the underlying asset tothe condition required by the terms and conditions of the lease, unless those costs are incurredto produce inventories.
（2） Subsequent measurement
After the commencement date, a lessee shall measure the right-of-use asset applying a costmodel. To apply a cost model, a lessee shall measure the right?of?use asset at cost less anyaccumulated depreciation and any accumulated impairment losses; and adjusted for anyremeasurement of the lease liability specified in the lease standardDepreciation of right-of -use assetSince the commencement date, the Company shall depreciate the right-of-use asset.Depreciation shall be made in the month of lease commencement and shall be accounted inthe cost of related asset or profit and loss.When determining the depreciation method, straight line method is used for depreciationbased on the expected way of consuming of economic benefit related to the right-of-use asset.The Company shall follow the following principles when determining the depreciation life ofthe use-right asset: if the ownership of the leased asset can be reasonably determined at theend of the lease term, depreciation shall be calculated and deducted during the remainingservice life of the leased asset; Where it is not certain that the ownership of the leased assetcan be acquired at the end of the lease term, depreciation shall be calculated during the periodof the shorter of the lease term and the remaining service life of the leased asset.ImpairmentThe Company shall depreciate the right-of-use asset subsequently based on the book valueafter impairment loss deduction if impairment is applicable.
24. Intangible assets
The intangible assets of the Company refer to land use right and software, patent,non-patented technology and other intangible asset should be measured at actual costs. Foracquired intangible assets, the actual costs are measured at actual price paid and relevantother expenses. The cost invested into intangible assets by investors shall be determinedaccording to the stated value in the investment contract or agreement, except for those ofunfair value in the contract or agreement, which the actual costs should be determined by thefair value.Land use right shall be amortized evenly within the amortization period since the remiseddate.ERP system software and other intangible assets are amortized over the shortest of their
estimated useful life, contractual beneficial period and useful life specified in the law.Amortization charge is included in the cost of assets or expenses, as appropriate, for theperiod according to the usage of the assets. At the end of the year, for definite life ofintangible assets, their estimated useful life and amortization method shall be assessed. Anychange shall be treated as change on accounting estimate.
25. Impairment of long-term assets
The Company assesses at each balance sheet date whether there is any indication thatlong-term equity investments, investment property, fixed assets, construction in progress,right-of-use assets and intangible assets with definite useful life may be impaired. If there isany indication that an asset may be impaired, the asset will be tested for impairment.Goodwill and intangible asset with infinite useful life are tested for impairment annually nomatter there is any indication of impairment or not.Estimate of recoverable amount is the higher of its fair value less costs to sell and the presentvalue of the future cash flows expected to be derived from the asset.If the recoverable amount of an asset is less than its carrying amount, the carrying amountshall be impaired and the difference is recognized as an impairment loss and charged to profitor loss for the period. Once an impairment loss on the assets is recognized, it is not reversedin a subsequent period.After assets impairment loss is recognized, depreciation and amortization of the impairedasset shall be adjusted in the following period so that the adjusted carrying amount (lessexpected residual value) can be depreciated and amortized systematically within theremaining life.Goodwill arising in a business combination and intangible asset with infinite useful life aretested for impairment annually no matter there is any indication of impairment or not.When assessing goodwill for impairment, the carrying amount of goodwill shall be allocatedevenly to the assets group or assets portfolio. When testing the assets group or assets portfolioincluding goodwill, if there is any indication of impairment , ignoring the goodwill andtesting the assets group or assets portfolio alone so to work out the recoverable amount andcomparing to its carrying amount and recognize the impairment loss. After that, testing theassets group or assets portfolio with goodwill together, comparing the carrying amount of theassets group or assets portfolio (including goodwill allocation) with recoverable amount,goodwill impairment shall be recognized when the recoverable amount is lower than itscarrying amount.
26. Long-term deferred expenses
Long-term deferred expenses of the Company refer to leasing expenses, redecoration expenseand others. The expenses should be amortized evenly over the beneficial period. If the
deferred expense cannot take benefit for the future accounting period, the unamortizedbalance of the deferred expenses should be transferred into the current profit or loss. Theamortization period should be determined by the contract. If the contract without theamortization period specification, leasing expenses will be amortized within 10 years and30years; redecoration expense and others will be amortized within 3 years.
27. Contract liability
An entity’s obligation to transfer goods or services to a customer for which the entity hasreceived consideration (or the amount is due) from the customer. If a customer paysconsideration, or an entity has a right to an amount of consideration that is unconditionalbefore the entity transfers a good or service to the customer, the entity shall present thecontract as a contract liability when the payment is made or the payment is due (whichever isearlier).
28. Employee benefits
Employee’s benefit comprises short-term benefit, post-employment benefit, terminationbenefit and other long-term employee’s benefit.Short-term benefit includes salary, bonus, allowance, welfare, social insurance, housing funds,labor union expense, staff training expense, during the period in which the service renderedby the employees, the actually incurred short term employee benefits shall be recognized asliability and shall be recognized in P&L or related cost of assets based on benefit objectiveallocated from the service rendered by employees.Post-employment benefits include the basic pension scheme and unemployment insurance etc.Based on the risk and obligation borne by the Company, post-employment benefits areclassified into defined contribution plan and defined benefit plan. For defined contributionplan, liability shall be recognized based on the contributed amount made by the Company toseparate entity at the balance sheet date in exchange of employee service for the period and itshall be recorded into current profit and loss account or relevant cost of assets in accordancewith beneficial objective.Termination benefits are employee’s benefit payable as a result of either an entity’s decisionto terminate an employee’s employment before the contract due date or an employee’sdecision to accept voluntary redundancy in exchange for those benefits. An entity shallrecognize the termination benefits as a liability and an expense at the earlier date when theentity cannot unilateral withdraw the termination benefits due to employment terminationplan or due to redundancy suggestion, or when the entity can recognize the restructuring costor expense arising from paying termination benefits.Other long-term employee’s benefit refers to all other employee benefits other than short-termbenefit, post-employment benefit and termination benefit.
If other long-term employee’s benefit is qualified as defined contribution plan, contributionmade shall be recognized as liabilities accordingly for the period in which the service arerendered by the employee and recognized in the profit or loss for the current period orrelevant cost of assets. Except other long-term employee’s benefit mentioned above,obligation arising from defined benefit plan shall be recognized in the profit or loss for thecurrent period or relevant cost of assets in accordance with the period when the service arerendered by the employee.
29. Lease obligation
(1) Initial measurement of the lease liability
At the commencement date, a lessee shall measure the lease liability at the present value ofthe lease payments that are not paid at that date.
1) The lease payments
The lease payments included in the measurement of the lease liability comprise the followingpayments for the right to use the underlying asset during the lease term that are not paid at thecommencement date: ① fixed payments (including in-substance fixed payments) less anylease incentives receivable;② variable lease payments that depend on an index or a rate,initially measured using the index or rate as at the commencement date;③ the exercise priceof a purchase option if the lessee is reasonably certain to exercise that option ④ payments ofpenalties for terminating the lease, if the lessee will certainly exercise an option to terminatethe lease during the lease term.⑤ amounts expected to be payable by the lessee underresidual value guarantees;
2) Discount rate
When calculating the present value of the lease payments, interest rate implicit in the leaseshall be used. The rate of interest that causes the present value of the lease payments and theunguaranteed residual value to equal the sum of the fair value of the underlying asset and anyinitial direct costs of the lessor. If the rate cannot be readily determined, the Company shalluse the lessee’s incremental borrowing rate, which is the rate of interest that a lessee wouldhave to pay to borrow over a similar term, and with a similar security, the funds necessary toobtain an asset of a similar value to the right-of-use asset in a similar economic environment.The implicit interest rate is relevant to the followings: ①the Company’s own situation:
solvency and creditability ② “borrow term”: lease term ③ “borrowed fund” amount:
lease liability amount ④“pledge condition”: nature and quality of underlying assets ⑤economic environment includes the jurisdiction in which the lessee is located, the currency ofdenomination, and when the contract was signed. The Incremental borrowing rate is derivedby the Company based on the bank lending rate and adjusted for the above factors.
(2) Subsequent measurement
After the commencement date, the Company shall measure the lease liability by: ①increasing the carrying amount to reflect interest on the lease liability; ② reducing thecarrying amount to reflect the lease payments made; ③ remeasuring the carrying amount toreflect any reassessment or lease modifications.Interest on the lease liability in each period during the lease term shall be the amount thatproduces a constant periodic rate of interest on the remaining balance of the lease liability andbe recognized as in profit or loss unless its capitalization. A constant periodic rate of interestis the discounting rate used for initial measurement of lease liability, or revised discountingrate for lease liability remeasurement because of the lease payment or lease change.
(3) Remeasurement
After the lease commencement date, lease payment shall be remeasured if the followingcircumstances incurred, and the lease liability shall be remeasured at the present value whichis based on the revised lease payment and revised discounting rate. A lessee shall recognizethe amount of the remeasurement of the lease liability as an adjustment to the right-of-useasset. However, if the carrying amount of the right-of-use asset is reduced to zero and there isa further reduction in the measurement of the lease liability, a lessee shall recognize anyremaining amount of the remeasurement in profit or loss. ①change of in-substance fixedpayments (subject to original discounting rate) ② change of amounts expected to be payableunder residual value guarantees(subject to original discounting rate) ③ change of an indexor a rate used for future lease payments(subject to revised discounting rate) ④ change inassessment of a buy option(subject to revised discounting rate) ⑤ change in assessment of arenew option or termination option or actual situation(subject to revised discounting rate).
30. Provision
When the Company has transactions such as commitment to externals, discounting the tradeacceptance, unsettled litigation or arbitration which meets the following criterion, provisionshould be recognized: It is the Company's present obligation; carrying out the obligation willprobably cause the Company's economic benefit outflow; the obligation can be reliablymeasured.Provision is originally measured on the best estimate of outflow for paying off the presentobligations.When determining the best estimate, need to consider the risk, uncertainty, time value ofmonetary relevant to contingent items. If the time value of monetary is significant, the bestestimate will be determined by discounted cash outflow in the future.When compensation from the 3rd party is expected for full or partial contingent liabilitysettlement, the compensation shall be recognized as an asset separately and measured at nomore than the book value of contingent liability.
31. Share based payment
An equity-settled share-based payment in exchange for the employee’s services is measuredat the fair value at the date when the equity instruments are granted to the employee. Such fairvalue during the vesting period of service or before the prescribed exercisable conditions areachieved is recognized as relevant cost or expense on a straight-line during the vesting periodbased on the best estimated quantity of exercisable equity instruments, accordingly increasecapital reserve.A cash-settled share-based payment is measured at the fair value at the date at which theCompany incurred liabilities that are determined based on the price of the shares or otherequity instruments. If it is immediately vested, the fair value of the liabilities at the date ofgrant is recognized as relevant cost or expense, and corresponding liabilities. If it isexercisable only when the vesting period of service is expired or the prescribed conditions areachieved, the fair value of liabilities undertaken by the Company are re-measured at eachbalance sheet date based on the best estimate of exercisable situation. According to the fairvalue which the Company incurred liabilities, and recognizing acquired services as costs orexpenses, and adjust liabilities accordingly.The fair value of the liabilities is re-measured at each balance sheet date. Any changes arerecognized in the profit or loss for the year.If the granted equity instruments are cancelled within the vesting period (apart from thesituation where the vesting condition is not satisfied), the equity instrument shall be treated asaccelerated vesting and regarded as all share based payment plan satisfying vesting condition,and all expense during the remaining vesting period shall be accounted at the same periodwhen the granted equity instruments are cancelled.
32. Principle of recognition and measurement of revenue
Accounting policyThe revenue of the Company is mainly from selling goods, providing engineering installationservices.The Company shall recognize revenue when (or as) the Company satisfies a performanceobligation by transferring a promised good or service to a customer. An asset is transferredwhen (or as) the customer obtains control of that asset.If the contract includes two or more performance obligations, at the inception date of contract,the Company shall allocate the transaction price to each performance obligation identified inthe contract on a relative standalone selling price ratio basis and measure the revenue at theallocated transaction price to each performance.The transaction price is the amount of consideration to which the Company expects to be
entitled in exchange for transferring promised goods or services to a customer, excludingamounts collected on behalf of third parties. The determined transaction price shall be limitedto the extent where the maximum reversal amount of revenue recognized with the leastpossibility once the uncertainty related to the variable consideration is removed. TheCompany shall recognize a refund liability if the entity receives consideration from acustomer and expects to refund some or all of that consideration to the customer. Where asignificant financing component exists in the contract, the transaction price shall be measuredat the assumed price that the payment is made by cash as the client receive the control right ofgoods or services. The difference between the promised consideration and the cash sellingprice shall be amortized within the contract period at effective interest rate. The Companyneed not take the financing component into the consideration if the entity expects, at contractinception, that the period between when the entity transfers a promised good or service to acustomer and when the customer pays for that good or service will be one year or less.When the Company transfers control of a good or service over time, it satisfies a performanceobligation and recognizes revenue over time only if one of the following criteria is met,otherwise it shall be the performance obligation at a point in time.
(1) the customer simultaneously receives and consumes the benefits provided by the entity’s
performance as the entity performs
(2) the Company’s performance creates or enhances an asset (for example, work in progress)
that the customer controls as the asset is created or enhanced
(3) the entity’s performance does not create an asset with an alternative use to the entity andthe entity has an enforceable right to payment for performance completed to dateIf it is performance obligation over time, the Company shall recognize the revenue inaccordance with the progress of performance obligation and measure the progress based oninput method. In the circumstances, the Company may not be able to reasonably measure theprogress of a performance obligation, but the Company expects to recover the costs incurredin satisfying the performance obligation. In those circumstances, the entity shall recognizerevenue only to the extent of the costs incurred until such time that it can reasonablymeasure the progress of the performance obligation.It satisfies a performance obligation at a point in time when the control right of goods orservices are received by the client, and revenue shall be recognized. Judging whether theclient has received the control right, the following indicators shall be considered:
(1) The entity has a present right to payment for the asset
(2) The legal title to the asset has been transferred to the customer
(3) The Company has transferred physical possession of the asset to the client
(4) The Company has transferred the significant risks and rewards of ownership of an assetto the customer
(5) The customer has accepted the goods or service
The right of receiving the consideration the Company entitled to, as the goods or servicehave been transferred, shall be listed as contract asset and impairment provision shall bebased on the expected credit loss. Unconditioned right of receiving the consideration shall belisted as receivable. The obligation shall be listed as contract liability where the Companyhas received consideration, but services or goods not transferred to the customer..33. Government grantsA government grant shall be recognized when the Company complies with the conditionsattaching to the grant and when the Company is able to receive the grant.Assets-related government grant is the government fund obtained by the Company for thepurpose of long-term assets purchase and construction or establishment in the other forms.Income-related grants are the grant given by the government apart from the assets-relatedgrants. If no grant objective indicated clearly in the government documents, the Companyshall judge it according to the principle mentioned above.Where a government grant is in the form of a transfer of monetary asset, it is measured at theamount received. Where a government grant is made on the basis of fixed amount orconclusive evidence indicates relevant conditions for financial support are met and expect toprobably receive the fund, it is measured at the amount receivable. Where a governmentgrant is in the form of a transfer of non-monetary asset, it is measured at fair value. If fairvalue cannot be determined reliably, it is measured at a nominal amount of RMB1 Yuan.Assets-related government grants are recognized as deferred income or directly offsettingthe book value of the asset, and Assets-related government grants recognized as deferredincome shall be evenly amortized to profit or loss over the useful life of the related asset.Any assets are sold, transferred, disposed off or impaired earlier than their useful life expireddate, the remaining balance of deferred income which hasn’t been allocated shall be carriedforward to the income statement when the assets are disposed off.Income-related government grants that is a compensation for related expenses or losses to beincurred in subsequent periods are recognized as deferred income and credited to therelevant period when the related expenses are incurred. Government grants relating tocompensation for related expenses or losses already incurred are charged directly to theprofit or loss for the period. Government grants related to daily business, shall be recognizedas other income in accordance with business nature or offsetting related expenses, otherwise,shall be recognized as non-operating income or expenses.
If any government grant already recognized needs to be returned to the government, theaccounting shall be differed according to the following circumstances:
1) originally recognized as offsetting of related assets' book value, assets book value shall
be adjusted,
2) if any deferred income, book value of deferred income shall be offset, excessive portion
shall be accounted into income statement,
3) Other situation, it shall be accounted into income statement directly.
34. Deferred tax assets and deferred tax liabilities
The deferred income tax assets or the deferred income tax liabilities should be recognizedaccording to the differences (temporary difference) between the carrying amount of the assetsor liabilities and its tax base. Deferred income tax assets shall be respectively recognized fordeductible tax losses that can be carried forward in accordance with tax law requirements fordeduction of taxable income in subsequent years. No deferred income tax liabilities shall berecognized for any temporary difference arising from goodwill initially recognition. Nodeferred income tax assets or liabilities shall be recognized for any difference arising fromassets or liabilities initial recognition on non-business combination with no effect on eitheraccounting profit or taxable profit (or deductible tax loss). At the balance sheet date, deferredincome tax assets and deferred income tax liabilities are measured at the tax rates that areexpected to apply to the period when the asset is realized or liability is settled.Deferred income tax assets are recognized to the extent that it is probable that future taxableprofit will be available to offset the deductible temporary difference, deductible loss and taxreduction.
35. Lease
(1) Lease identification
Lease: A contract, or part of a contract, that conveys the right to use an asset (the underlyingasset) for a period of time in exchange for consideration. At inception of a contract, the entityshall assess whether the contract is, or contains, a lease. A contract is, or contains, a lease ifthe contract conveys the right to control the use of an identified asset for a period of time inexchange for consideration. In order to confirm whether the right to control the use of anidentified asset for a period of time has been conveyed, the Company assess whether theclient in the contract has the right to obtain substantially all of the economic benefits from useof the asset throughout the period of use and has the right to direct the use of the identifiedasset during the period of using the identified asset.For a contract that is, or contains several leases, the Company shall separate the contract andaccount each lease separately. The Company shall account for each lease component
separately from non-lease components of the contract if the contract contains lease andnon-lease components.
(2) As a leasee
1) Recognition
At the commencement date, the Company as a lessee shall recognize a right-of-use asset anda lease obligation. Recognition and measurement of right-of-use asset and a lease obligationis referred to 23. Right-of -use asset and 29. Lease obligation
2) Lease modification
Lease modification is a change in the scope of a lease, or the consideration for a lease, thatwas not part of the original terms and conditions of the lease (for example, adding orterminating the right to use one or more underlying assets, or extending or shortening thecontractual lease term). Lease modification effective date is the date when both parties agreeto a lease modification.The Company shall account for a lease modification as a separate lease if both condition aresatisfied: ① the modification increases the scope of the lease by adding the right to use oneor more underlying assets or extending the contractual lease term. ② the consideration forthe lease increases by an amount commensurate with the stand-alone price for the increase inscope or the contractual lease term extension and any appropriate adjustments to thatstand-alone price to reflect the circumstances of the particular contract.For a lease modification that is not accounted for as a separate lease, at the effective date ofthe lease modification the Company shall: allocate the consideration in the modified contract;determine the lease term of the modified lease and remeasure the lease liability bydiscounting the revised lease payments using a revised discount rate. The Company used theinterest rate implicit in the lease for the remainder of the lease term as discounting rate. Thelessee’s incremental borrowing rate at the effective date of the modification will be used if theinterest rate implicit in the lease cannot be readily determined. The effect on aboveadjustments of lease liability shall be accounted respectively in accordance with thefollowings: ①decreasing the carrying amount of the right-of-use asset to reflect the partial orfull termination of the lease for lease modifications that decrease the scope of the lease. Thelessee shall recognize in profit or loss any gain or loss relating to the partial or fulltermination of the lease. ② making a corresponding adjustment to the right-of-use asset forall other lease modifications.
3) Short-term lease and low value asset lease
The Company has chosen not to recognize the right-of-use asset and lease liability forshort-term lease ( lease term less than 12 months) and low value asset when it is single leasednew asset. In this case, lease payment will be accounted directly in profit or loss or on the
straight-line basis in profit or loss.
(3) As a lessor
Based on the assessment of (1) lease contract or lease contract contained, as a lessor, at theinception date, lease is classified as finance lease and operating lease.A lease is classified as a finance lease if it transfers substantially all the risks and rewardsincidental to ownership of an underlying asset. Other lease is classified as an operating leaseunless a finance lease.Examples of situations that individually or in combination would normally lead to a leasebeing classified as a finance lease are: ①the lease transfers ownership of the underlying assetto the lessee by the end of the lease term; ②the lessee has the option to purchase theunderlying asset at a price that is expected to be sufficiently lower than the fair value at thedate the option becomes exercisable for it to be reasonably certain, at the inception date, thatthe option will be exercised; ③the lease term is for the major part of the economic life of theunderlying asset even if title is not transferred(not shorter than 75% of leased asset life); ④at the inception date, the present value of the lease payments amounts to at least substantiallyall of the fair value of the underlying asset( not lower than 90% of leased asset FV); ⑤ theunderlying asset is of such a specialized nature that only the lessee can use it without majormodifications. Indicators of situations that individually or in combination could also lead to alease being classified as a finance lease are: ①if the lessee can cancel the lease, the lessor’slosses associated with the cancellation are borne by the lessee; ②gains or losses from thefluctuation in the fair value of the residual accrue to the lessee; ③the lessee has the ability tocontinue the lease for a secondary period at a rent that is substantially lower than market rent.
1) Financing lease
Initial measurementAt the commencement date, the Company shall recognize the lease payment receivable andderecognize of finance lease asset. When initially measuring the lease payment receivable, netlease investment value shall be used for the lease payment receivable.Net lease investment value equals to the any residual value guarantees plus the PV of unduelease receivable discounted at the interest rate implicit in the lease. Lease receivable is thatlessor conveys the right to use an asset (the underlying asset) for a period of time in exchangefor consideration including ① fixed payments (including in-substance fixed payments) lessany lease incentives receivable;② variable lease payments that depend on an index or a rate,initially measured using the index or rate as at the commencement date;③ the exercise priceof a purchase option if the lessee is reasonably certain to exercise that option ④ payments ofpenalties for terminating the lease, if the lessee will certainly exercise an option to terminatethe lease during the lease term.⑤ residual value guarantees expected by the lessee and the
independent 3
rdparty relevant to the lessee with the economic ability to guarantee.Subsequent measurementThe Company shall recognize interest income over the lease term based on a constantperiodic rate, which is the implicit discounting rate of return on the lessor’s net investment inthe lease.( if sublease applicable, implicit rate of sublease can not be determined, originaldiscounting rate of lease shall be adopted after adjustment for initial direct expense relevant tosublease) or when finance lease modification is not accounted as an separate lease, adjusteddiscounting rate will be adopted for the lease since it is classified as finance lease assumingmodification took effect at the commencement date of lease.Lease modificationThe Company shall account for a finance lease modification as a separate lease if bothcondition are satisfied: ① the modification increases the scope of the lease by adding theright to use one or more underlying assets. ② the consideration for the lease increases by anamount commensurate with the stand-alone price for the increase in scope or the contractuallease term extension and any appropriate adjustments to that stand-alone price to reflect thecircumstances of the particular contract.For a finance lease modification that is not accounted for as a separate lease, if the leasewould have been classified as an operating lease and the modification have been in effect atthe inception date, the lessor shall account for the lease modification as a new lease from theeffective date of the modification; and measure the carrying amount of the underlying asset asthe net investment in the lease immediately before the effective date of the lease modification.
2) Operating lease
Lease incomeLease payment received shall be recognized as lease income on a straight-line basis within theperiod.Incentive measuresIf the lease-free period is provided, the Company will allocate the total lease income in thewhole lease period on the straight-line basis regardless of lease-free period, and the leaseincome shall be recognized during the rent-free period. If the Company bears some expensesof the lessee, such expenses shall be deducted from the total lease income and the remainingbalance of lease income shall be allocated within the lease period.Initial direct expenseThe Company shall add initial direct costs incurred in obtaining an operating lease to thecarrying amount of the underlying asset and recognize those costs as an expense over thelease term on the same basis as the lease income.
DepreciationThe depreciation policy for depreciable underlying fixed assets subject to operating leasesshall be consistent with the lessor’s normal depreciation policy for similar assets.Amortization for other underlying assets subject to operating lease shall be on reasonablesystematic basis.Variable lease paymentThe variable lease payments obtained by the Company related to operating leases, which arenot included in the lease payment received, shall be included in the current profit and losswhen actually incurredOperating lease modificationA lessor shall account for a modification to an operating lease as a new lease from theeffective date of the modification, considering any prepaid or accrued lease payments relatingto the original lease as part of the lease payments for the new lease.
(4) Special lease
Sales and lease back
1) as a seller and a leasee
In accordance with Revenue Standard-No.14 of Accounting Standards for BusinessEnterprises, the Company assesses whether the transfer of the asset is a sale. If the transfer ofassets is not a sale, the Company shall continue to recognize the transferred assets and at thesame time recognize a financial liability equal to the transfer income, and recognize, measurethe financial liability in accordance with the Recognition and Measurement of FinancialInstruments Standard- No. 22 - Accounting Standards for Business Enterprises. If the transferof assets is a sale, the Company shall measure the right-of-use asset arising from theleaseback at the proportion of the previous carrying amount of the asset that relates to theright of use retained by the Company. Accordingly, the Company shall recognize only theamount of any gain or loss that relates to the rights transferred to the buyer-lessor.
2) as a buyer and a leasor
If the transfer of assets is not a sale, the Company shall not recognize the transferred asset andshall recognize a financial asset equal to the transfer proceeds. It shall account for thefinancial asset applying Recognition and Measurement of Financial Instruments Standard- No.22 - Accounting Standards for Business Enterprises. If the transfer of assets is a sale, theCompany shall account for the purchase of the asset applying applicable Standards.
36. Held for sale
（1） Any non-current assets or disposal group shall be classified as held for sale if the
following criteria are met: 1) According to the similar transactions for selling such assets ordisposal group in practice, the assets must be available for immediate sale under currentcondition. 2) The sale is highly probable with decision made on a probable selling proposaland the firm purchase commitment has been obtained, the sale is expected to be completedwithin one year. Certain regulations request that approvals must be given by relevantauthority or supervision regulator before the assets can be sold. Prior to the assets initiallyclassified as held for sale or disposal group, the carrying amounts of the asset (or all the assetsand liabilities in the disposal group) shall be measured in accordance with applicableaccounting standards. The Company shall recognize an impairment loss and account it in toincome statement for the current period, for any initial or subsequent write- down of the asset(or disposal group) to its fair value less costs to sell if the carrying amount is higher than itsfair value less costs to sell. In the meantime, provision for assets impairment shall be made.
（2） The Company acquires a non-current asset(or disposal group) exclusively with a viewto its subsequent resale, it shall be classified as held for sale at the acquisition date only if thecondition of “expected sale can be completed within one year” can be met and also otherconditions of classified as held for sale can highly probably be met within a short periodfollowing the acquisition(usually with three months). When measuring a newly acquired asset(or disposal group) meeting the criteria to be classified as held for sale, it shall be measured atthe lower of its carrying amount had it not been so classified and fair value less costs to sell.Except the non-current assets or disposal group acquired as part of a business combination,the difference between its fair value less costs to sale and initial carrying amount isrecognized in the income statement.
（3） The Company that loss of control of a subsidiary due to a sale plan of its investmentshall classify its subsidiary planned for sale as a whole as held for sale in the single financialstatement of the parent only if the investment in subsidiary meets the criteria of held for sale,regardless of whether the Company will retain a proportion of equity interest in its formersubsidiary after sale, and classify all assets and liabilities of the subsidiary as held for sale inthe consolidated financial statements
（4） The Company shall recognize a gain for any subsequent increase in fair value lesscosts to sell of an asset and shall reverse the impairment to the extent that previouslyrecognized when being classified as held for sale, the revisable amount is recognized in theincome statement for the period. Any impairment from the period when the assets are notclassified as held for sale cannot be reversed.
（5） The impairment loss recognized for a disposal group shall reduce the carrying amountof goodwill of disposal group first, and then reduce the carrying amount of the non-currentassets based on its proportion on the book.
（6）The Company shall recognize a gain for any subsequent increase in fair value less costs
to sell of a disposal group and shall reverse the impairment to the extent that previouslyrecognized when being classified as held for sale, in accordance with applicable measuringstandards, the revisable amount is recognized in the income statement for the period. Anyimpairment from the period when the assets are not classified as held for sale and reducedgoodwill cannot be reversed.
（7）For any subsequently reversed amount, after the impairment loss is recognized for heldfor sale disposal group, the Company shall increase the carrying amount of disposal groupbased on the proportion of carrying amount of non-current assets excluding goodwill.
（8） Non-current assets classified as held for sale or disposal group shall not be depreciatedor amortized, interest and other expenses attributable to the liabilities of a disposal groupclassified as held for sale shall continue to be recognized.
（9） When held for sale assets or disposal group cannot meet the criteria for held for saleclassification so that they are not recognized as held for sale or non-current asset will beremoved from disposal group, they shall be measured at the lower of the following amounts:
⑴carrying amount of assets prior to it classified as held for sale, which is the amount afterdepreciation, amortization or impairment adjustment as it had not been classified as held forsale ; ⑵recoverable amount.
（10）When the Company derecognizes the held for sale assets or disposal group, theremaining unrecognized gain or loss shall be accounted in the income statement.
37. Discontinued operation
When meeting any one of the following criteria, the component can be identified separately
and the component has already been disposed off or classified as held for sale: (1) the
component represents one independent main business or one single main business area; (2)
the component plans to be part of the related plan which represents one independent main
business or one single main business area; (3) the component was specially acquired for
resale
38. Other significant accounting policies, accounting estimates
When preparing the financial statements, the management needs to use accounting estimate
and assumption, which will have effect on the application of accounting policy and amount of
asset, liability, income and expense. The actual circumstance maybe differs from the estimates.
The management needs to continuously assess the key assumption involved by estimate and
the judgment on uncertainty. Effect on the accounting estimate shall be recognized during the
period when estimate is changed and in future.
The following accounting estimate and key assumption will trigger the significant risk of
significant adjustment on the book value of asset and liability during the period of future.
（1） Impairment of financial instrument
The Company uses expected credit loss model to assess any impairment of financial asset.When applying expected credit loss model, the Company shall take all necessary factors intoaccount as requested such as significant judgment, estimate and all reasonable andsupportable information including forward looking information. Repayment history inconjunction with economic policy, macro environment ratio, industry and sector risk etc shallalso be considered when judging expected change of debtor’s credit risk.
（2） Provision of inventory impairment
Inventory is periodically evaluated at the net realizable value and any cost higher than NRVshall be recognized as inventory impairment loss. When evaluating the NRV, net realizablevalue is determined by deducting the expected selling expense and relative tax from theestimated selling price. When actual selling price or cost differs from the previous estimates,management will make adjustment on NRV. Therefore, the results based on the presentexperience may differ from the actual results, which caused the adjustment on the carryingamount of inventory in the book. Provision for inventory impairment may vary with theabove reasons. Any adjustment on provision for inventory impairment will affect the incomestatement.
（3） Provision of goodwill impairment
Each year, goodwill shall be assessed for any impairment. Recoverable amount of assetsgroup or asset portfolio including goodwill shall be the present value of future cash flow,which needs estimates for calculation.If management adjust the gross profit margin adopted by the present value of future cash flowcalculation of assets group or asset portfolio, adjusted gross profit margin is lower than themargin applied, the impairment is required.If management adjust the discounting rate before tax applied by the present value of futurecash flow calculation of assets group or asset portfolio, adjusted discounting rate before tax ishigher than the rate applied, the impairment is required.If actual profit margin or discounting rate before tax is higher or lower than management’sestimate, any impairment recognized before cannot be reversed.
（4） Provision of fixed asset impairment
At the balance sheet date, the management shall implement impairment test on buildings,plant and machinery etc which has any impairment indicator. The recoverable amount of FAis the higher of PV of future cash flow and net value of fair value after disposal cost, thecalculation needs accounting estimate.If management adjust the gross profit margin adopted by the present value of future cash flow
calculation of assets group or asset portfolio, adjusted gross profit margin is lower than themargin applied, the impairment is required.If management adjust the discounting rate before tax applied by the present value of futurecash flow calculation of assets group or asset portfolio, adjusted discounting rate before tax ishigher than the rate applied, the impairment is required.If actual profit margin or discounting rate before tax is higher or lower than management’sestimate, any impairment recognized before cannot be reversed.
（5） Recognition of deferred tax assets
Estimate on deferred tax assets needs making estimation of taxable income and applied taxrate in the following years in future. Whether deferred tax asset can be realized depends onthe enough probable taxable profit obtained in future. Tax rate change in future and the timingof temporary difference reverse may also affect the income tax expense(income)and thebalance of deferred tax. Any change of estimate described here will cause the deferred taxadjustment.
39. Changes in Accounting Policies, Accounting Estimates
(1) Change in significant accounting policies
| Changes on accounting policy and reasons | Approval progress | Memo |
| The accounting policy change has been approved by the 18th meeting of the 8th generation of board. | Note |
Note. New lease standardNew standard took effect since January 1, 2021. New standard improves the lease definition,add lease identification, split or merge; withdraw the classification for operating lease andfinance lease, requesting to recognize right-of-use asset and lease obligation for all lease apartfrom short-term lease and low value asset lease, at the lease inception date. Improve the
subsequent measurement of lease as a lessor, add accounting and disclosure request for leasemodification and reassessment of buy option. Lease recognition and measurement as a lessorand lessee under new lease standard is referred to No.35 of accounting policy of this Note.Any existing contract prior to the beginning of the first adoption year, shall not be reassessed bythe Company for lease or contained lease on the first adoption date.The Company adjusts the opening figure of retain earnings and relevant other items in thestatements for cumulative effect on new lease standard first adoption without adjustment ofcomparative figures. Operating lease before first adoption date shall be measured for leaseobligation based on the PV of remaining lease payment at incremental borrowing rate on thefirst adoption date and for all leases, right-of-use asset shall be adjusted for lease prepayment inline with the lease obligation amount.Lease modification or lease contract signed after first adoption date, at inception of a contract,the entity shall assess whether the contract is, or contains, a lease in accordance with new leasestandard. A contract is, or contains, a lease if the contract conveys the right to control the use ofan identified asset for a period of time in exchange for consideration. New lease standard has nosignificant effect on the lease contract scope within the defined lease contract.New lease standard adoption effect on opening balance of balance sheet
Consolidated balance sheet
| Effected Items | December 31st,2020 | Effect on new standard adoption | January 1st,2021 |
| Fixed asset | 891,147,058.82 | -24,948,202.78 | 866,198,856.04 |
| Right-of-use asset | - | 27,449,505.03 | 27,449,505.03 |
| Non- current liability due within one year | 37,157,126.41 | 1,340,825.77 | 38,497,952.18 |
| Lease obligation | - | 13,818,476.46 | 13,818,476.46 |
| Long-term payable | 14,622,463.75 | -12,657,999.98 | 1,964,463.77 |
Balance sheet of parent company
| Effected Items | December 31st,2020 | Effect on new standard adoption | January 1st,2021 |
| Right-of-use asset | - | 1,775,041.11 | 1,775,041.11 |
| Non- current liability due within one year | 25,000,034.00 | 986,385.93 | 25,986,419.93 |
| Effected Items | December 31st,2020 | Effect on new standard adoption | January 1st,2021 |
| Lease obligation | - | 788,655.18 | 788,655.18 |
(2) Changes in significant accounting estimates
No.V. Taxation
1. The main applicable tax and rate to the Company as follows:
| Tax | Tax base | Tax rate |
| Value-added tax (VAT) | Sales revenue or Purchase | 6%、9%、13%、 |
| City construction tax | Value-added tax payables | 7% |
| Education surcharge | Value-added tax payables | 3% |
| Local education surcharge | Value-added tax payables | 2% |
| Enterprise income tax(EIT) | Current period taxable profit | 15% or 25% |
| Real estate tax | 70% of cost of own property or revenue from leasing property | 1.2% or 12% |
| Land use tax | Land using right area | Fixed amount per square meter |
| Other tax | According to the relevant provisions of the state and local |
Notes for tax entities with different EIT rate
| Tax entities | EIT rate |
| Bingshan Refrigeration & Heat Transfer Technologies Co. ,Ltd | 15% |
| Dalian Bingshan Group Engineering Co., Ltd. | 25% |
| Dalian Bingshan Group Sales Co., Ltd. | 25% |
| Dalian Bingshan Air-conditioning Equipment Co., Ltd. | 15% |
| Dalian Bingshan JiaDe Automation Co., Ltd. | 15% |
| Dalian Bingshan Lingshe Quick Freezing Equipment Co., Ltd. | 25% |
| Wuhan New World Refrigeration Industrial Co., Ltd. | 15% |
| Bingshan Technical Service （Dalian） Co., Ltd. | 15% |
| Dalian Bingshan International Trading Co. ,Ltd | 25% |
| Dalian Niweisi LengNuan Techonoligy Co., Ltd. | 15% |
| Dalian Xinminghua Electrical Technology Co., Ltd | 15% |
| Ningbo Bingshan Air-conditioning Refrigeration Engineering Co., Ltd | 25% |
| Chengdu Bingshan Refrigeration Engineering Co., Ltd. | 25% |
| Tax entities | EIT rate |
| Bingshan Refrigeration & Heat Transfer Technologies Co. ,Ltd | 15% |
| Wuhan New World Air-conditioning Refrigeration Engineering Co., Ltd | 25% |
| Wuhan Lanning Energy Technology Co., Ltd | 25% |
2. Tax preference
The Company obtained the qualification of high and new technology enterprises on 3
rd
December, 2020 approved by Dalian Science Technology Bureau, Dalian Finance Bureau,Dalian State Tax Bureau and Local tax Bureau. The Certificate No. is GR202021200646, andthe validity duration is three years. According to the tax law, the Company can be granted forthe preferential tax policy of enterprise income tax rate of 15% in three years.The Company’s subsidiary, Dalian Bingshan Air-conditioning Equipment Co., Ltd. obtainedthe qualification of high and new technology enterprises on 3
rd
December, 2020 approved byDalian Science Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau andLocal tax Bureau. The Certificate No. is GR202021200672, and the validity duration is threeyears. According to the tax law, the Company can be granted for the preferential tax policy ofenterprise income tax rate of 15% in three years.The Company’s subsidiary, Dalian Bingshan JiaDe Automation Co., Ltd. obtained thequalification of high and new technology enterprises on 15
th
December, 2021 approved byDalian Science Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau andLocal tax Bureau. The Certificate No. is GR202121200765, and the validity duration is threeyears. According to the tax law, the Company can be granted for the preferential tax policy ofenterprise income tax rate of 15% in three years.The Company’s subsidiary, Wuhan New World Refrigeration Industrial Co., Ltd obtained thequalification of high and new technology enterprises on 15
th
November, 2021 approved byHubei Science Technology Bureau, Hubei Finance Bureau, Hubei State Tax Bureau and HubeiLocal tax Bureau. The Certificate No. is GR202142001696, and the validity duration is threeyears. According to the tax law, the Company can be granted for the preferential tax policy ofenterprise income tax rate of 15% in three years.The Company’s subsidiary, Bingshan Technical Service （Dalian） Co., Ltd. obtained thequalification of high and new technology enterprises on 3
rd
December, 2020 approved byDalian Science Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau andLocal tax Bureau. The Certificate No. is GR202021200540, and the validity duration is threeyears. According to the tax law, the Company can be granted for the preferential tax policy ofenterprise income tax rate of 15% in three years.The Company’s subsidiary, Dalian Niweisi LengNuan Techonoligy Co., Ltd. obtained thequalification of high and new technology enterprises on 3
rd
December, 2020 approved by
Dalian Science Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau andLocal tax Bureau. The Certificate No. is GR202021200570, and the validity duration is threeyears. According to the tax law, the Company can be granted for the preferential tax policy ofenterprise income tax rate of 15% in three years.The Company’s subsidiary, Dalian Xinminghua Electrical Technology Co., Ltd obtained thequalification of high and new technology enterprises on 3
rdDecember, 2020 approved byDalian Science Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau andLocal tax Bureau. The Certificate No. is GR202021200699, and the validity duration is threeyears. According to the tax law, the Company can be granted for the preferential tax policy ofenterprise income tax rate of 15% in three years.VI. Notes to Consolidated Financial StatementsThe following disclosure date on this financial statement without special indication, “opening”refers to January 1, 2021; “closing” refers to December 31, 2021; “current period” refers to theperiod from January 1, 2021 to December 31, 2021; and “last period” refers to the period fromJanuary 1, 2020 to December 31, 2020; with the currency unit RMB.
1. Cash and cash in bank
| Item | Closing Balance | Opening Balance |
| Cash on hand | 99,580.64 | 154,668.54 |
| Cash in bank | 443,177,237.30 | 316,921,397.57 |
| Other cash and cash equivalents | 79,381,687.85 | 56,369,665.56 |
| Total | 522,658,505.79 | 373,445,731.67 |
| Including: sum of deposits overseas |
Note: Other cash and cash equivalents is restricted, including deposit for bank acceptance notesof 64,672,285.64 Yuan, guarantee deposit of 14,438,026.76Yuan, peasant worker deposit of271,375.45Yuan, and frozen amount of 4,307,480.07 Yuan by the bank due to litigation total of83,689,167.92Yuan.
2. Notes receivable
(1) Category of notes receivable
| Items | Closing Balance | Opening Balance |
| Bank acceptance notes | 163,956,682.86 | 109,424,884.35 |
| Trade acceptance notes | 2,473,682.88 | 29,696,153.43 |
| Total | 166,430,365.74 | 139,121,037.78 |
(2) Pledged notes receivable up to the end of year.
| Items | Closing pledged amount |
| Bank acceptance notes | 6,420,000.00 |
| Total | 6,420,000.00 |
(3) Notes receivable endorsed or discounted but not mature at the end of year
| Item | Closing amount no more recognized | Closing amount still recognized |
| Bank acceptance notes | 148,851,791.08 | |
| Trade acceptance notes | 220,000.00 | |
| Total | 149,071,791.08 |
(4) There is no transfer to receivable as the drawer’s default of performance of obligation
(5) Categories according to bad debts provision
| Items | Closing Balance | ||||
| Booking balance | Provision | Booking value | |||
| Amount | % | Amount | % | ||
| Bad debts provision based on group | 166,617,129.06 | 100.00 | 186,763.32 | 0.11 | 166,430,365.74 |
| Including: bank acceptance notes | 163,956,682.86 | 98.40 | - | - | 163,956,682.86 |
| Trade acceptance notes | 2,660,446.20 | 1.60 | 186,763.32 | 7.02 | 2,473,682.88 |
| Total | 166,617,129.06 | 100.00 | 186,763.32 | 0.11 | 166,430,365.74 |
(Continued)
| Items | Opening balance | ||||
| Booking balance | Provision | Booking value | |||
| Amount | % | Amount | % | ||
| Bad debts provision based on group | 141,363,100.56 | 100.00 | 2,242,062.78 | 1.59 | 139,121,037.78 |
| Including: bank acceptance notes | 109,424,884.35 | 77.41 | - | - | 109,424,884.35 |
| Trade acceptance notes | 31,938,216.21 | 22.59 | 2,242,062.78 | 7.02 | 29,696,153.43 |
| Total | 141,363,100.56 | 100.00 | 2,242,062.78 | 1.59 | 139,121,037.78 |
Categories based on group
| Items | Closing Balance | ||
| Booking balance | Provision | Provision（%） | |
| Items | Closing Balance | ||
| Booking balance | Provision | Provision（%） | |
| Trade acceptance notes | 2,660,446.20 | 186,763.32 | 7.02 |
| Total | 2,660,446.20 | 186,763.32 | — |
(6) Bad debt provision of notes receivable accrued, collected and reversed
| Category | Opening balance | Change during the year | Closing Balance | ||
| Accrued | Collected/reversed | Written-off | |||
| Bad debt provision | 2,242,062.78 | - | 2,055,299.46 | - | 186,763.32 |
| Total | 2,242,062.78 | - | 2,055,299.46 | - | 186,763.32 |
(7) Notes receivable written off: none
3. Accounts receivable
(1) Category of accounts receivable
| Items | Closing Balance | ||||
| Booking balance | Provision | Booking value | |||
| Amount | % | Amount | % | ||
| Accounts receivable with significant individual amount and separate bad debt provision | - | - | - | - | - |
| Accounts receivable with bad debt provision based on the characters of credit risk portfolio | 1,193,312,546.52 | 100.00 | 371,763,867.67 | 31.15 | 821,548,678.85 |
| Including: aging as characteristics of credit risk | 1,193,312,546.52 | 100.00 | 371,763,867.67 | 31.15 | 821,548,678.85 |
| Total | 1,193,312,546.52 | 100.00 | 371,763,867.67 | 31.15 | 821,548,678.85 |
(Continued)
| Items | Opening balance | ||
| Booking balance | Provision | Booking value | |
| Amount | % | Amount | % | ||
| Accounts receivable with significant individual amount and separate bad debt provision | 9,375,092.34 | 0.85 | 262,313.88 | 2.80 | 9,112,778.46 |
| Accounts receivable with bad debt provision based on the characters of credit risk portfolio | 1,089,352,275.04 | 99.15 | 281,453,097.75 | 25.84 | 807,899,177.29 |
| Including: aging as characteristics of credit risk | 1,089,352,275.04 | 99.15 | 281,453,097.75 | 25.84 | 807,899,177.29 |
| Total | 1,098,727,367.38 | 100.00 | 281,715,411.63 | 25.64 | 817,011,955.75 |
1) Accounts receivable with the bad debt provisions under accounting aging analysis method
| Aging | Closing Balance | ||
| Accounts receivable | Provision for bad debts | (%) | |
| Within 1 year | 523,064,082.35 | 36,719,098.59 | 7.02 |
| 1 to 2 years | 173,592,528.16 | 29,059,389.21 | 16.74 |
| 2 to 3 years | 90,996,620.72 | 28,054,258.17 | 30.83 |
| 3 to 4 years | 172,830,349.33 | 85,257,211.32 | 49.33 |
| 4 to 5years | 144,183,323.44 | 104,028,267.86 | 72.15 |
| Over 5 years | 88,645,642.52 | 88,645,642.52 | 100.00 |
| Total | 1,193,312,546.52 | 371,763,867.67 | — |
(2) Receivable listed by aging
| Aging | Closing Balance |
| Within 1 year | 523,064,082.35 |
| 1 to 2 years | 173,592,528.16 |
| 2 to 3 years | 90,996,620.72 |
| 3 to 4 years | 172,830,349.33 |
| 4 to 5years | 144,183,323.44 |
| Over 5 years | 88,645,642.52 |
| Total | 1,193,312,546.52 |
(3)Bad debt provision of current period
| Category | Opening balance | Change during the year | Closing Balance | ||
| Accrued | reversed | Written-off | |||
| Bad debt provision | 281,715,411.63 | 98,150,920.76 | 276,589.05 | 7,825,875.67 | 371,763,867.67 |
| Total | 281,715,411.63 | 98,150,920.76 | 276,589.05 | 7,825,875.67 | 371,763,867.67 |
(4) Accounts receivable written off in current period
| Item | Written off amount |
| Receivable actually written off | 7,825,875.67 |
Key debtors written off
| Company name | Nature | amount | reason | Procedures implemented | Related party transaction |
| Beijing Bingshan Refrigeration and Air Conditioning Equipment Co., Ltd | Trade receivable | 805,309.06 | litigation expired | Board meeting | No |
| Yingkou Shenzhen-Hong Kong Co. LTD | Trade receivable | 667,528.00 | litigation expired | Board meeting | No |
| Singapore JX INSULATION ENGINEERING PTE LTD | Trade receivable | 571,170.91 | litigation expired | Board meeting | No |
| Jiangxi Saiwei LDK Solar Polysilicon Co., LTD | Trade receivable | 475,621.94 | litigation expired | Board meeting | No |
| Zengyi E-business (Wuhan) Co., Ltd | Trade receivable | 288,056.88 | litigation expired | Board meeting | No |
| Xinjiang Sanhai Preservation Garden Co. LTD | Trade receivable | 285,000.00 | court judged, client has no enforceable asset | Board meeting | No |
| Shandong Linjia Chemical Technology Co., LTD | Trade receivable | 268,034.19 | contract termination | Internal approval | No |
| Qinghai Taifeng Xianxing Lithium Energy Technology Co. LTD | Trade receivable | 260,000.00 | litigation expired | Board meeting | No |
| Dalian Xinghai Bay Development & Construction Center | Trade receivable | 248,693.00 | project disband, no money to pay | Board meeting | No |
| Company name | Nature | amount | reason | Procedures implemented | Related party transaction |
| Dalian Xuelong Industry Group Co. Ltd | Trade receivable | 231,600.00 | court judged, client has no enforceable asset | Board meeting | No |
| Dazhou City Fuxing Market Development Co. LTD | Trade receivable | 200,000.00 | litigation expired | Board meeting | No |
| Total | — | 4,301,013.98 | — | — | — |
(5) The top five significant accounts receivable categorized by debtors
| Company | Closing Balance | Aging | % of the total AR | Closing Balance of Provision |
| State Grid Intergrated Energy Service Group Co.,Ltd | 43,253,684.30 | Within 1 year | 3.62 | 3,036,408.64 |
| Panasonic Cold-chain (Dalian) Co., Ltd | 37,390,849.92 | Within 1 year | 3.13 | 2,624,837.66 |
| Xinyi Yuanda Construction and Installation Engineering Co., Ltd. | 32,748,744.00 | 4-5 years over 5years | 2.74 | 25,281,907.38 |
| Qingchengxian Zhongyi Energy Co.,Ltd | 24,375,000.00 | 1-2 years | 2.04 | 4,080,375.00 |
| Dalian Xinghai Bay Development & Construction Center | 24,020,836.00 | over 5years | 2.01 | 18,577,302.85 |
| Total | 161,789,114.22 | - | 13.54 | 53,600,831.53 |
4. Finance receivable
| Items | Closing Balance | Opening Balance |
| Notes receivable | 43,704,310.38 | 61,737,282.56 |
| Total | 43,704,310.38 | 61,737,282.56 |
5. Prepayments
(1) Aging of prepayments
| Items | Closing Balance | Opening Balance | ||
| Amount | Percentage (%) | Amount | Percentage (%) | |
| Within 1 year | 146,457,045.63 | 80.16 | 111,133,100.83 | 71.93 |
| 1 to 2 years | 16,304,629.82 | 8.92 | 24,880,404.77 | 16.11 |
| 2 to 3 years | 12,765,104.33 | 6.99 | 9,313,439.77 | 6.03 |
| Over 3 years | 7,174,623.77 | 3.93 | 9,154,563.98 | 5.93 |
| Total | 182,701,403.55 | 100.00 | 154,481,509.35 | 100.00 |
Significant prepayments over 1 year
| Company | Closing Balance | Aging | Unsettled Reasons |
| Dalian Hengtong Refrigeration Equipment engineering Co., Ltd | 5,720,000.00 | 3-4 years | Contract is not fully implemented |
| Dalian Shengda Construciton Enginering Co., Ltd | 3,878,617.15 | 1-2 years 2-3 years | Contract is not fully implemented |
| PT MULTI SUKSES ENGINEERING | 2,537,821.33 | 1-2 years | Contract is not fully implemented |
| Shanghai POMA Automation Equipment Co., Ltd | 2,090,625.02 | Over 5 years | Contract is not fully implemented |
| Nanjing Bingshan Mechanical and Electrical Co.,Ltd | 1,785,408.00 | 1-2 years | Contract is not fully implemented |
| Total | 16,012,471.50 | — | — |
(2) The top five significant advances to suppliers categorized by debtors
| Company | Closing Balance | Aging | % of the total advances to suppliers |
| Trading Co., Ltd | 15,480,717.06 | Within 1year | 8.47 |
| Dalian Shentong Electric Co., Ltd. | 15,019,165.34 | Within 1year | 8.22 |
| Angang Steel Company Ltd | 5,858,716.72 | Within 1year | 3.21 |
| Dalian Hengtong Refrigeration Equipment engineering Co., Ltd | 5,720,000.00 | 3-4 years | 3.13 |
| Shanghai Qingneng Cold Chain Equipment Engineering Co., LTD | 4,270,859.96 | Within 1year | 2.34 |
| Total | 46,349,459.08 | - | 25.37 |
6. Other receivables
| Items | Closing Balance | Opening Balance |
| Interest receivable | 46,879.68 | |
| Dividend receivable | 1,003,568.75 | 25,923.75 |
| Other receivables | 59,336,527.70 | 67,454,373.43 |
| Total | 60,340,096.45 | 67,527,176.86 |
6.1 Interest receivable
(1) Classification
| Items | Closing Balance | Opening Balance |
| Interest on term deposits | 46,879.68 | |
| Total | 46,879.68 |
6.2. Dividends receivable
(1) Classification
| Company | Closing Balance | Opening Balance |
| Guotai Junan Securities | 952,000.00 | - |
| Wuhan Steel and Electricity Co., Ltd. | 51,568.75 | 25,923.75 |
| Total | 1,003,568.75 | 25,923.75 |
6.3. Other receivables
(1) The categories of other receivable according to nature
| Items | Closing Balance | Opening Balance |
| Deposits | 26,933,345.60 | 26,232,362.26 |
| Petty cash | 5,654,074.94 | 5,325,764.44 |
| Receivables and payables | 36,138,235.04 | 47,714,138.78 |
| Others | 1,609,350.55 | 1,619,770.46 |
| Total | 70,335,006.13 | 80,892,035.94 |
(2) The bad debt provision of other receivables
| Bad debt provision | 1st stage | 2nd stage | 3rd stage | Total | |
| Expected credit loss within 12 months | Expected credit loss within the whole period (no impairment) | Expected credit loss within the whole period (impairment incurred) | |||
| Opening balance | 13,437,662.51 | - | - | 13,437,662.51 | |
| Opening balance during the year | — | — | — | — | |
| --transfer to the 2nd stage | |||||
| --transfer to the 3rd stage | 3,276,389.66 | - | 3,276,389.66 | - | |
| Bad debt provision | 1st stage | 2nd stage | 3rd stage | Total | |
| Expected credit loss within 12 months | Expected credit loss within the whole period (no impairment) | Expected credit loss within the whole period (impairment incurred) | |||
| --reverse to the 2nd stage | |||||
| ----reverse to the 1st stage | |||||
| Accrued | - | - | 893,557.46 | 893,557.46 | |
| Reverse | 1,001,325.54 | - | - | 1,001,325.54 | |
| Cancelation | |||||
| Written off | 2,331,416.00 | - | - | 2,331,416.00 | |
| Other movement | |||||
| Closing balance | 6,828,531.31 | - | 4,169,947.12 | 10,998,478.43 | |
(2) Other receivable listed by account aging
| Aging | Closing Balance |
| Within 1 year | 52,507,621.43 |
| 1-2 years | 4,641,078.98 |
| 2-3 years | 3,440,749.25 |
| 3-4 years | 3,349,594.88 |
| 4-5 years | 2,226,014.47 |
| Over 5 years | 4,169,947.12 |
| Total | 70,335,006.13 |
(4) Provision for bad debt
| Category | Opening balance | Change during the year | Closing Balance | ||
| Accrued | Collected/reversed | Written-off | |||
| Bad debt provision | 13,437,662.51 | - | 107,768.08 | 2,331,416.00 | 10,998,478.43 |
| Total | 13,437,662.51 | - | 107,768.08 | 2,331,416.00 | 10,998,478.43 |
(5) Other receivables written off in current period: none.
| Item | Amount to be written off |
| Other receivables written off actually | 2,331,416.00 |
Key other receivable written off
| Company name | Nature | Amount | Reason | Procedures implemented | Related party transaction |
| Dalian Lihua Coating Equipment | Receivable &payable | 1,650,000.00 | Court judged, client has no enforceable asset | Internal approval | No |
| Welding Co.,Ltd | &payable | 677,416.00 | Court judged, client has no enforceable asset | Internal approval | No |
| Total | — | 2,327,416.00 | — | — | — |
(6) Other receivables from the top 5 debtors
| Name | Category | Closing Balance | Aging | % of the total OR | Closing Balance of Provision |
| Co.,Ltd | Refund | 28,895,000.00 | Within 1 year | 41.08 | 1,204,921.50 |
| PICC Dalian Branch | Compensation | 5,000,000.00 | Within 1 year | 7.11 | 208,500.00 |
| Agriculture Bureau of Moyu County | Deposit | 2,548,847.50 | 2-3 years | 3.62 | 577,236.44 |
| Cangzhou Lingang RenguoChemical Co., LTD | Deposit | 2,000,000.00 | Within 1 year | 2.84 | 83,400.00 |
| Dalian DETA Hong Kong &China Gas Co.,Ltd | Deposit | 1,125,000.00 | 3-4 years | 1.60 | 1,125,000.00 |
| Total | 39,568,847.50 | - | 56.25 | 3,199,057.94 |
(7) Other receivables from government grant: none
7. Inventories
(1) Categories of inventories
| Item | Closing Balance | ||
| Book value | Provision for decline | Net book value | |
| Raw materials | 166,815,875.73 | 4,570,316.95 | 162,245,558.78 |
| Working in progress | 171,554,710.97 | 1,929,842.21 | 169,624,868.76 |
| Finished goods | 300,140,274.98 | 29,448,083.12 | 270,692,191.86 |
| Item | Closing Balance | ||
| Book value | Provision for decline | Net book value | |
| Low-value consumable | 51,817.59 | - | 51,817.59 |
| Self-manufactured semi-finished products | 30,747,861.83 | - | 30,747,861.83 |
| Cost to fulfill the contract | 295,750,380.56 | 11,185,200.11 | 284,565,180.45 |
| Materials on consignment for further processing | 887,585.94 | - | 887,585.94 |
| Goods in transit | 86,049,156.11 | - | 86,049,156.11 |
| Properties written off debtors | 14,866,010.00 | 5,203,103.50 | 9,662,906.50 |
| Total | 1,066,863,673.71 | 52,336,545.89 | 1,014,527,127.82 |
(Continued)
| Item | Opening Balance | ||
| Book value | Provision for decline | Net book value | |
| Raw materials | 103,332,663.42 | 1,064,716.71 | 102,267,946.71 |
| Working in progress | 117,243,035.94 | 1,929,842.21 | 115,313,193.73 |
| Finished goods | 244,721,287.34 | 2,528,193.70 | 242,193,093.64 |
| Low-value consumable | 171,759.42 | 171,759.42 | |
| Self-manufactured semi-finished products | 28,814,287.69 | 28,814,287.69 | |
| Cost to fulfill the contract | 193,840,972.71 | 193,840,972.71 | |
| Materials on consignment for further processing | 480,473.35 | 480,473.35 | |
| Goods in transit | 33,573,632.23 | 33,573,632.23 | |
| Properties written off debtors | 20,206,542.00 | 5,203,103.50 | 15,003,438.50 |
| Total | 742,384,654.10 | 10,725,856.12 | 731,658,797.98 |
(2) Provision for decline in the value of inventories
| Item | Opening Balance | Increase | Decrease | Closing Balance | |
| Accrual | Written- off | Others transferred | |||
| Raw materials | 1,064,716.71 | 3,619,173.37 | 113,573.13 | - | 4,570,316.95 |
| Finished goods | 2,528,193.70 | 31,526,166.74 | 4,606,277.32 | - | 29,448,083.12 |
| Cost to fulfill the | - | 11,185,200.11 | - | - | 11,185,200.11 |
| Item | Opening Balance | Increase | Decrease | Closing Balance | |
| Accrual | Written- off | Others transferred | |||
| contract | |||||
| WIP | 1,929,842.21 | - | - | - | 1,929,842.21 |
| Properties written off debtors | 5,203,103.50 | - | - | - | 5,203,103.50 |
| Total | 10,725,856.12 | 46,330,540.22 | 4,719,850.45 | - | 52,336,545.89 |
Accrual for provision for decline in the value of inventories
| Item | Basis for net realizable value recognition | Reasons for reverse/write-off |
| Raw materials | The amount deducting the expected cost to product completion, selling expense and relative tax from the estimated selling price. | Sold within the year |
| Finished goods | Scrap within the year | |
| Completed constructing projects unsettled | —— |
8. Contract asset
(1) Details
| Item | Closing Balance | Opening Balance | ||||
| Carrying amount | Provision | Book value | Carrying amount | provision | Book value | |
| Undue warranty | 125,891,499.90 | 16,031,841.11 | 109,859,658.79 | 104,165,706.10 | 12,735,694.50 | 91,430,011.60 |
| Total | 125,891,499.90 | 16,031,841.11 | 109,859,658.79 | 104,165,706.10 | 12,735,694.50 | 91,430,011.60 |
(2) Provision for impairment
| Item | Accrued | Reverse | Collected/written off | Reason |
| Undue warranty | 3,296,146.61 | |||
| Total | 3,296,146.61 |
9. Noncurrent asset due within one year
| Item | Closing Balance | Opening Balance |
| Long term receivable due within 1 year | 14,990,989.30 | 42,003,576.60 |
| Total | 14,990,989.30 | 42,003,576.60 |
10. Other current assets
| Item | Closing Balance | Opening Balance |
| Prepaid income tax presented at net amount after offsetting | 380,483.32 | 390,518.40 |
| VAT to be deducted | 23,989,939.28 | 22,375,761.22 |
| Prepaid turnover tax | - | 1,876.94 |
| Prepaid expenses | 154,654.11 | 445,934.88 |
| Total | 24,525,076.71 | 23,214,091.44 |
11. Long term receivable
(1) Details
| Item | Closing Balance | ||
| Carrying amount | Provision | Book value | |
| Lease premium | |||
| ---Unrealized financing income | |||
| Goods sold by installments | |||
| Services rendered by installments | |||
| Total | |||
(Continued)
| Item | Opening Balance | ||
| Carrying amount | Provision | Book value | |
| Lease premium | |||
| ---Unrealized financing income | |||
| Goods sold by installments | 71,750,205.16 | 5,882,231.91 | 65,867,973.25 |
| Services rendered by installments | |||
| Total | 71,750,205.16 | 5,882,231.91 | 65,867,973.25 |
(2) Provision for bad debt
| Bad debt provision | 1st stage | 2nd stage | 3rd stage | Total |
| Expected credit loss within 12 months | Expected credit loss within the whole period (no impairment) | Expected credit loss within the whole period (impairment incurred) | ||
| Opening balance | 9,218,793.44 | - | - | 9,218,793.44 |
| Opening |
| Bad debt provision | 1st stage | 2nd stage | 3rd stage | Total |
| Expected credit loss within 12 months | Expected credit loss within the whole period (no impairment) | Expected credit loss within the whole period (impairment incurred) | ||
| balance during the year | ||||
| --transfer to the 2nd stage | ||||
| --transfer to the 3rd stage | ||||
| --reverse to the 2nd stage | ||||
| ----reverse to the 1st stage | ||||
| Accrued | ||||
| Reverse | 4,636,661.13 | - | - | 4,636,661.13 |
| Cancelation | 3,430,522.73 | - | - | 3,430,522.73 |
| Written off | ||||
| Other movement | ||||
| Closing balance | 1,151,609.58 | - | - | 1,151,609.58 |
Note：the difference between opening balance and closing balance of bad debt provision andlong-term receivable is the part of non-current asset due within one year.
12.Long-term equity investments
| Investee | Beginning balance | Increase/Decrease | Ending balance | Provision for impairment | ||||||||
| Increased | Decreased | Gains and losses recognized under the equity method | Adjustment of other comprehensive income | Change of other equity | Cash bonus or profits announced to issue | Provision for impairment of the current period | Others | |||||
| Associates | ||||||||||||
| Panasonic Refrigeration (Dalian) Co., Ltd | 163,867,472.86 | 147,270,127.38 | -14,994,567.44 | -322,778.04 | 1,280,000.00 | |||||||
| Panasonic Cold-Chain (Dalian) Co., Ltd. | 205,987,069.49 | -112,859,182.84 | 2,797,849.22 | 90,330,037.43 | ||||||||
| Panasonic Compressor (Dalian) Co., Ltd. | 462,033,107.31 | 30,800,342.18 | 32,773,200.00 | 460,060,249.49 | ||||||||
| Dalian Honjo Chemical Co., Ltd. | 8,746,197.03 | 741,303.19 | 561,233.70 | 8,926,266.52 | ||||||||
| Keinin-Grand Ocean Thermal Technology (Dalian) Co., Ltd. | 55,934,955.38 | 4,864,112.90 | 2,000,000.00 | 58,799,068.28 | ||||||||
| Beijing Huashang Bingshan Refrigeration and Air-conditioning Machinery Co., Ltd. | 2,121,951.69 | 17,990.49 | 2,139,942.18 | |||||||||
| Dalian Fuji Bingshan Vending Machine Co., Ltd. | 184,454,138.22 | -35,798,123.47 | 148,656,014.75 | |||||||||
| MHI Bingshan Refrigeration (Dalian) Co.,Ltd. | 14,891,119.67 | 32,684.20 | 14,923,803.87 | |||||||||
| Investee | Beginning balance | Increase/Decrease | Ending balance | Provision for impairment | ||||||||
| Increased | Decreased | Gains and losses recognized under the equity method | Adjustment of other comprehensive income | Change of other equity | Cash bonus or profits announced to issue | Provision for impairment of the current period | Others | |||||
| Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd | - | 44,046,635.07 | 742,684.48 | 44,789,319.55 | ||||||||
| Dalian Fuji Bingshan Vending Machine Sales Co., Ltd | 43,546.35 | -43,546.35 | - | |||||||||
| Jiangsu Jingxue Insulation Technology Co.,Ltd | 203,208,828.97 | 14,646,669.36 | -16,123,970.29 | 201,731,528.04 | ||||||||
| Panasonic cold Machine System (Dalian) Co., Ltd | 30,034,799.53 | 2,341,469.67 | 3,895,484.27 | 28,480,784.93 | ||||||||
| Dalian Bingshan Metal Technology Co.,Ltd | 173,158,546.15 | 23,785,030.56 | 28,648,633.78 | 168,294,942.93 | ||||||||
| Wuhan Sikafu Power Control Equipment Co., Ltd | 4,360,034.66 | 12,540.82 | 4,372,575.48 | |||||||||
| Total | 1,508,841,767.31 | 44,046,635.07 | 147,270,127.38 | -85,710,592.25 | -322,778.04 | -16,123,970.29 | 71,956,400.97 | 1,231,504,533.45 | ||||
13. Other non-current financial assets
| Item | Closing Balance | Opening Balance |
| Financial assets classified as FVTPL | 261,410,664.61 | 239,304,098.83 |
| Including: equity instruments | 261,410,664.61 | 239,304,098.83 |
| Total | 261,410,664.61 | 239,304,098.83 |
14. Investment property
(1) Investment property measured as cost model
| Item | Property& building | Land-use-rights | Total |
| I. Initial cost | |||
| 1. Opening balance | 232,232,862.29 | 26,094,438.38 | 258,327,300.67 |
| 2. Increase | - | - | - |
| (1) Purchase | - | - | - |
| (2) Transferred from fixed assets | - | - | - |
| 3. Decrease | 1,638,372.22 | - | 1,638,372.22 |
| (1) Disposal | 1,638,372.22 | - | 1,638,372.22 |
| (2)Transferred to other | - | - | - |
| 4. Closing Balance | 230,594,490.07 | 26,094,438.38 | 256,688,928.45 |
| II. Accumulated depreciation | |||
| 1. Opening balance | 120,254,007.46 | 11,784,815.29 | 132,038,822.75 |
| 2. Increase | 4,964,628.38 | 521,888.76 | 5,486,517.14 |
| (1)Provision or amortization | 4,964,628.38 | 521,888.76 | 5,486,517.14 |
| (2) Acquired from business combination | - | - | - |
| 3. Decrease | 1,589,221.05 | - | 1,589,221.05 |
| (1) Disposal | 1,589,221.05 | - | 1,589,221.05 |
| (2) Transferred to other | - | - | - |
| 4. Closing balance | 123,629,414.79 | 12,306,704.05 | 135,936,118.84 |
| III. Impairment reserve | |||
| 1. Opening balance | - | - | - |
| 2. Increase | - | - | - |
| (1)Provision or amortization | - | - | - |
| 3. Decrease | - | - | - |
| (1) Disposal | - | - | - |
| Item | Property& building | Land-use-rights | Total |
| (2) Transferred to other | - | - | - |
| 4. Closing balance | - | - | - |
| IV. Book value | |||
| 1. Closing book value | 106,965,075.28 | 13,787,734.33 | 120,752,809.61 |
| 2. Opening book value | 111,978,854.83 | 14,309,623.09 | 126,288,477.92 |
15. Fixed assets
| Items | Closing Book Value | Opening Book Value |
| Fixed asset | 855,395,405.85 | 866,198,856.04 |
| Fixed asset disposal | - | - |
| Total | 855,395,405.85 | 866,198,856.04 |
(1) Fixed assets detail
| Item | buildings | Machinery equipment | Transportation equipment | Other equipment | Total |
| I. Initial cost | |||||
| 1.Opening balance | 681,009,688.70 | 598,423,183.53 | 13,816,050.64 | 67,611,429.29 | 1,360,860,352.16 |
| 2. Increase | 14,334,194.44 | 37,939,787.74 | 731,097.72 | 1,432,195.72 | 54,437,275.62 |
| (1) Purchase | 4,923,745.23 | 20,134,853.79 | 731,097.72 | 1,413,883.28 | 27,203,580.02 |
| (2) Transferred from construction-in-progress | 9,410,449.21 | 17,804,933.95 | - | 18,312.44 | 27,233,695.60 |
| (3) Acquired from business combination | - | - | - | - | - |
| 3. Decrease | 19,109,659.24 | 1,632,948.89 | 7,507,883.83 | 28,250,491.96 | |
| (1) Disposal | 19,109,659.24 | 1,632,948.89 | 7,507,883.83 | 28,250,491.96 | |
| (2) Transferred to other | - | - | - | - | - |
| (3)Acquired from business combination | - | - | - | - | - |
| 4.Closing balance | 695,343,883.14 | 617,253,312.03 | 12,914,199.47 | 61,535,741.18 | 1,387,047,135.82 |
| Item | buildings | Machinery equipment | Transportation equipment | Other equipment | Total |
| II. Accumulated depreciation | |||||
| 1.Opening balance | 110,559,657.19 | 321,922,328.23 | 9,532,630.58 | 52,129,560.62 | 494,144,176.62 |
| 2. Increase | 20,785,743.79 | 36,857,989.35 | 749,782.79 | 5,191,605.31 | 63,585,121.24 |
| (1)Accrued | 20,785,743.79 | 36,857,989.35 | 749,782.79 | 5,191,605.31 | 63,585,121.24 |
| (2)Acquired from business combination | - | - | - | - | - |
| 3. Decrease | 17,718,578.63 | 1,475,972.81 | 7,158,775.99 | 26,353,327.43 | |
| (1) Disposal | 17,718,578.63 | 1,475,972.81 | 7,158,775.99 | 26,353,327.43 | |
| (2) Transferred to other | - | - | - | - | - |
| (3)Acquired from business combination | - | - | - | - | - |
| 4.Closing balance | 131,345,400.98 | 341,061,738.95 | 8,806,440.56 | 50,162,389.94 | 531,375,970.43 |
| III. Impairment reserve | |||||
| 1.Opening balance | 517,319.50 | 517,319.50 | |||
| 2. Increase | - | - | - | - | - |
| (1)Accrued | - | - | - | - | - |
| 3. Decrease | - | 241,559.96 | - | - | 241,559.96 |
| (1) Disposal | - | 241,559.96 | - | - | 241,559.96 |
| 4.Closing balance | - | 275,759.54 | - | - | 275,759.54 |
| IV.Book value | |||||
| 1.Closing book value | 563,998,482.16 | 275,915,813.54 | 4,107,758.91 | 11,373,351.24 | 855,395,405.85 |
| 2.Opening book value | 570,450,031.51 | 275,983,535.80 | 4,283,420.06 | 15,481,868.67 | 866,198,856.04 |
(2) Temporarily idle fixed assets: none.
(3) Fixed assets leased out under operating lease: none.
16. Construction-in-progress
| Item | Closing book value | Opening book value |
| Construction-in-progress | 38,974,478.45 | 34,254,599.42 |
| Construction materials | - | |
| Total | 38,974,478.45 | 34,254,599.42 |
(1) Construction-in-progress details
| Item | Closing balance | Opening balance | ||||
| Book balance | Provision | Book Value | Book balance | Provision | Book value | |
| Buildings & reconstruction | 2,457,434.83 | - | 2,457,434.83 | 3,628,913.65 | 3,628,913.65 | |
| Improvement of machinery | 26,282,497.83 | - | 26,282,497.83 | 3,724,069.06 | 3,724,069.06 | |
| Software of intelligent manufacture | 1,069,880.60 | - | 1,069,880.60 | 1,843,202.03 | 1,843,202.03 | |
| network | - | - | - | 15,893,749.49 | 15,893,749.49 | |
| Financing lease item | 9,164,665.19 | - | 9,164,665.19 | 9,164,665.19 | 9,164,665.19 | |
| Total | 38,974,478.45 | - | 38,974,478.45 | 34,254,599.42 | 34,254,599.42 | |
(2) Change in the significant construction in progress
| Name | Opening balance | Increase | Decrease | balance | ||
| Transfer to FA/ Intangible assets | Other decrease | |||||
| Buildings & reconstruction | 3,628,913.65 | 10,112,439.62 | 9,410,449.21 | - | 4,330,904.06 | |
| Improvement of machinery | 3,724,069.06 | 22,394,788.54 | 1,709,829.00 | - | 24,409,028.60 | |
| Software of intelligent manufacture | 1,843,202.03 | 83,185.83 | 856,507.26 | - | 1,069,880.60 | |
| network | 15,893,749.49 | 219,667.90 | 16,113,417.39 | - | - | |
| Financing lease item | 9,164,665.19 | - | - | - | 9,164,665.19 | |
| Total | 34,254,599.42 | 32,810,081.89 | 28,090,202.86 | - | 38,974,478.45 | |
(Continued)
| Name | Budget | Percent of investment against budget(%) | of construction | Accumulated capitalized interest | Including: accumulated capitalized interest of the year | rate(%) | Source of funds |
| Buildings & reconstruction | 15,241,000.00 | 28.42 | 28.42 | Self financing | |||
| Improvement of machinery | 50,358,032.00 | 48.47 | 48.47 | Self financing | |||
| Software of intelligent manufacture | 3,330,750.00 | 32.12 | 32.12 | Self financing | |||
| network | 19,614,500.00 | 100.00 | 100.00 | Self financing | |||
| Financing lease item | 15,020,000.00 | 61.02 | 61.02 | 837,440.00 | borrowing | ||
| Total | — | — | — | — | — | — | — |
17. Right-of-use assets
| Item | Land use right | Patent | Non Patent | Others | Total |
| I. Initial cost | |||||
| 1.Opening balance | 2,501,302.25 | 29,049,058.84 | - | 526,894.11 | 32,077,255.20 |
| 2. Increase | 2,326,296.24 | - | 334,540.86 | - | 2,660,837.10 |
| (1) lease in | 2,326,296.24 | - | 334,540.86 | - | 2,660,837.10 |
| 3. Decrease | - | 814,368.45 | - | - | 814,368.45 |
| 4.Closing balance | 4,827,598.49 | 28,234,690.39 | 334,540.86 | 526,894.11 | 33,923,723.85 |
| II.Accumulated amortization | |||||
| 1.Opening balance | - | 4,601,162.49 | - | 26,587.68 | 4,627,750.17 |
| 2. Increase | 1,654,921.59 | 3,673,481.35 | 111,513.62 | 117,114.00 | 5,557,030.56 |
| (1)Accrued | 1,654,921.59 | 3,673,481.35 | 111,513.62 | 117,114.00 | 5,557,030.56 |
| 3. Decrease | - | 195,760.25 | - | - | 195,760.25 |
| 4.Closing balance | 1,654,921.59 | 8,078,883.59 | 111,513.62 | 143,701.68 | 9,989,020.48 |
| III. Impairment reserve |
| Item | Land use right | Patent | Non Patent | Others | Total |
| 1. Opening balance | - | - | - | - | - |
| 2. Increase | - | - | - | - | - |
| 3. Decrease | - | - | - | - | - |
| 4.Closing balance | - | - | - | - | - |
| IV. Book value | |||||
| 1. Closing book value | 3,172,676.90 | 20,155,806.80 | 223,027.24 | 383,192.43 | 23,934,703.37 |
| 2. Opening book value | 2,501,302.25 | 24,447,896.35 | 500,306.43 | 27,449,505.03 |
18. Intangible assets
| Item | Land use right | Patent | Patent | Others | Total |
| I. Initial cost | |||||
| 1.Opening balance | 151,187,270.24 | 17,630,188.82 | 5,000,000.00 | 30,994,907.82 | 204,812,366.88 |
| 2. Increase | - | - | - | 5,053,917.37 | 5,053,917.37 |
| (1) Purchase | - | - | - | 4,197,410.11 | 4,197,410.11 |
| (2) increase via merge | - | - | - | - | - |
| (3) Transferred from construction-in-progress | - | - | - | 856,507.26 | 856,507.26 |
| 3. Decrease | - | - | - | 2,041,480.71 | 2,041,480.71 |
| (1) Disposal | - | - | - | 2,041,480.71 | 2,041,480.71 |
| (2)Transferred to investment property | - | - | - | - | - |
| 4.Closing balance | 151,187,270.24 | 17,630,188.82 | 5,000,000.00 | 34,007,344.48 | 207,824,803.54 |
| II.Accumulated amortization | |||||
| 1.Opening balance | 36,211,973.05 | 6,038,799.65 | 2,500,004.00 | 14,618,868.94 | 59,369,645.64 |
| 2. Increase | 3,061,044.46 | 1,572,360.20 | 500,000.00 | 2,769,845.85 | 7,903,250.51 |
| (1)Accrued | 3,061,044.46 | 1,572,360.20 | 500,000.00 | 2,769,845.85 | 7,903,250.51 |
| (2)Increase from merger | - | - | - | - | - |
| 3. Decrease | - | - | - | 2,040,830.71 | 2,040,830.71 |
| (1) Disposal | - | - | - | 2,040,830.71 | 2,040,830.71 |
| (2) Transferred to other | - | - | - | - | - |
| 4.Closing balance | 39,273,017.51 | 7,611,159.85 | 3,000,004.00 | 15,347,884.08 | 65,232,065.44 |
| III. Impairment reserve |
| Item | Land use right | Patent | Patent | Others | Total |
| 1. Opening balance | |||||
| 2. Increase | - | - | - | - | - |
| (1)Accrued | - | - | - | - | - |
| (2) Others | - | - | - | - | - |
| 3. Decrease | - | - | - | - | - |
| (1) Disposal | - | - | - | - | - |
| (2) Transferred to other | - | - | - | - | - |
| 4.Closing balance | - | - | - | - | - |
| IV. Book value | |||||
| 1. Closing book value | 111,914,252.73 | 10,019,028.97 | 1,999,996.00 | 18,659,460.40 | 142,592,738.10 |
| 2. Opening book value | 114,975,297.19 | 11,591,389.17 | 2,499,996.00 | 16,376,038.88 | 145,442,721.24 |
19. Goodwill
(1) Original cost of goodwill
| Name | Opening Balance | Increased during current year | Decreased during current year | Closing Balance | ||
| Enterprises merger increase | Other | Disposal | Other | |||
| Dalian Niweisi LengNuan Techonoligy Co., Ltd. | 1,440,347.92 | 1,440,347.92 | ||||
| Dalian Bingshan Group Construction Co., Ltd | 310,451.57 | 310,451.57 | ||||
| Total | 1,750,799.49 | 1,750,799.49 | ||||
(2) Goodwill impairment provision
In the year 2015, the book value of equity investment of Dalian Niweisi LengNuan TechnologyCo., Ltd exceeds the fair value of the proportion of the acquired company’s identifiable net asset.The difference between the book value of equity investment of 48, 287,589.78 Yuan and theidentifiable net asset’s fair value of Dalian Sanyo High-efficient Refrigeration System Co., Ltdof 46,847,241.86 Yuan on the acquisition date of July 31
st,2015 is recognized as goodwill of1,440,347.92 Yuan on The Company consolidated financial report at the end of the year.In the year 2016, Dalian Bingshan Group Construction Co., Ltd purchases shares of DalianBingshan Baoan Leisure Industry Co., Ltd and gains control. The transferred price is based onthe net asset of Dalian BingshanBaoan Leisure Industry Co., Ltd on June 30
th
, 2016. Negotiated
with Dalian Bingshan Baoan Leisure Industry Co., Ltd’s shareholder Baoan Water Project(China) Limited Company, the transfer price is the combination cost on the purchasing datewhich is 5,359,548.42 Yuan, the fair value of proportion of Dalian BingshanBaoan LeisureIndustry Company’s identifiable net asset is 5,049,096.85 Yuan on the purchasing day, therefore,goodwill is 310,451.57Yuan on the purchasing date. Dalian Bingshan Group Construction Co.,Ltd absorbed Dalian Bingshan Baoan Leisure Industry Co., Ltd in 2019.The book value of goodwill from business combination of Dalian Niweisi LengNuanTechnology Co., Ltd and Dalian Bingshan Baoan Leisure Industry Co., Ltd which are not undersame control shall be allocated into the relevant asset group using the reasonable method sinceacquisition date and taken impairment test on relevant asset group where the goodwill isincluded. The obvious impairment indication of the goodwill hasn’t been found. Thus nogoodwill impairment provision has been made.
20. Long-term unamortized expense
| Item | Opening Balance | Increase | Amortization | Other Decrease | Closing balance |
| Employee’s dormitory use right | 1,873,692.06 | 138,478.32 | 1,735,213.74 | ||
| Renovation and rebuilding | 1,172,157.14 | 151,335.00 | 1,020,822.14 | ||
| Membership fee for golf | 423,500.00 | 16,500.00 | 407,000.00 | ||
| Technology entrance fee of cold and heat machinery | 466,781.25 | 373,425.00 | 93,356.25 | ||
| Greenland of new factory | 5,724,407.62 | 892,115.52 | 4,832,292.10 | ||
| Total | 9,660,538.07 | 1,571,853.84 | 8,088,684.23 |
21. Deferred tax assets and deferred tax liabilities
(1) Deferred tax assets without offsetting
| Item | Closing balance | Opening balance | ||
| Deductible temporary difference | Deferred tax assets | Deductible temporary difference | Deferred tax assets | |
| Provision for credit impairment | 367,572,645.45 | 77,433,815.32 | 298,515,515.22 | 60,167,592.33 |
| Provision for impairment of assets | 55,608,764.16 | 10,412,376.27 | 23,719,518.02 | 4,011,984.07 |
| Provision | - | - | 7,171,726.51 | 1,792,931.63 |
| Deductible loss | - | - | 3,581,714.09 | 895,428.52 |
| Unrealized profit from internal transaction | 13,555,883.61 | 2,033,382.54 | 14,077,263.75 | 2,111,589.56 |
| Total | 436,737,293.22 | 89,879,574.13 | 347,065,737.59 | 68,979,526.11 |
(2) Deferred tax liabilities without offsetting
| Item | Closing balance | Opening balance | ||
| Taxable temporary difference | Deferred tax liabilities | Taxable temporary difference | Deferred tax liabilities | |
| Change on FV of other non-current financial assets | 237,308,998.02 | 35,596,349.70 | 213,402,432.24 | 32,010,364.83 |
| Total | 237,308,998.02 | 35,596,349.70 | 213,402,432.24 | 32,010,364.83 |
(3) Unrecognized deferred tax assets details
| Item | Closing balance | Opening balance |
| Deductible temporary difference | 30,659,975.23 | 3,738,153.26 |
| Deductible loss | 224,773,151.64 | 107,036,874.97 |
| Total | 255,433,126.87 | 110,775,028.23 |
(4) Unrecognized deductible loss of deferred tax assets expired years
| Year | Closing balance | Opening balance | Notes |
| 2022 | 716,158.09 | 716,158.09 | |
| 2023 | 16,458,262.38 | 16,458,262.38 | |
| 2024 | 61,554,422.97 | 62,405,136.73 | |
| 2025 | 21,436,832.18 | 27,457,317.77 | |
| 2026 | 124,607,476.02 | ||
| Total | 224,773,151.64 | 107,036,874.97 |
22. Short-term borrowing
(1) Category of short term borrowing
| Loan category | Closing balance | Opening balance |
| Credit loan | 230,373,666.72 | 276,011,600.00 |
| Mortgaged loan | 9,025,000.00 | 6,960,000.00 |
| Pledged loan | 6,538,425.00 | |
| Total | 245,937,091.72 | 282,971,600.00 |
23. Notes payable
| Notes Category | Closing balance | Opening balance |
| Bank acceptance notes | 372,141,300.89 | 293,073,330.48 |
| Commercial acceptance notes | 7,891,738.67 | 2,078,041.90 |
| Total | 380,033,039.56 | 295,151,372.38 |
Note: There is no due note unpaid at the year end.
24. Accounts payable
(1) Accounts payable
| Item | Closing balance | Opening balance |
| Material payments | 558,353,834.37 | 459,748,015.17 |
| Project payments | 328,569,617.62 | 227,092,621.70 |
| Equipment payments | 31,092,321.64 | 76,820,952.59 |
| Others | 1,856,153.90 | 3,605,642.97 |
| Total | 919,871,927.53 | 767,267,232.43 |
(2) Main accounts payable with age over 1 year
| Name of company | Closing balance | Reason of unpaid or not carried forward |
| Haoxing Nengtou(Beijing) Assets management Co.,Ltd | 7,039,659.99 | Payment is undue |
| Lixingkai (Beijing) Energy System Technology Co.,Ltd | 4,772,705.82 | Payment is undue |
| Guangdong Shenling Environmental System Co., LTD | 3,354,251.85 | Payment is undue |
| Heilongjiang Longleng Technology Co., Ltd | 3,209,930.00 | Payment is undue |
| Hangzhou Zhonghong New Energy Co., Ltd | 2,914,000.00 | Payment is undue |
| Total | 21,290,547.66 | — |
25. Contract liability
(1) Details
| Item | Closing balance | Opening balance |
| Received in advance due from unrealized revenue | 499,719,963.40 | 295,100,657.10 |
| Total | 499,719,963.40 | 295,100,657.10 |
(2) Significant change on the book value
| Item | Change amount | Change reason |
| Received in advance due from unrealized revenue | 204,619,306.30 | According to the contract, received the payment from the client in advance |
| Total | 204,619,306.30 |
26. Employee’s payable
(1) Category of employee’s payable
| Item | Opening balance | Increase | Decrease | Closing balance |
| Short-term employee’s | 31,125,808.94 | 327,144,789.45 | 323,122,028.02 | 35,148,570.37 |
| Item | Opening balance | Increase | Decrease | Closing balance |
| payable | ||||
| Post-employment benefit –defined contribution plan | 32,661,497.29 | 32,661,285.18 | 212.11 | |
| Termination benefits | ||||
| Other welfare due within 1 year | ||||
| Total | 31,125,808.94 | 359,806,286.74 | 355,783,313.20 | 35,148,782.48 |
(2) Short-term employee’s payables
| Item | Opening balance | Increase | Decrease | Closing balance |
| Salaries, bonus, allowance, and subsidy | 26,526,326.00 | 262,869,852.53 | 258,139,697.01 | 31,256,481.52 |
| Welfare | 3,080,018.99 | 15,255,636.90 | 16,486,324.24 | 1,849,331.65 |
| Social insurance | 16,445.29 | 20,092,705.81 | 20,108,489.90 | 661.20 |
| Include: Medical insurance | 14,860.20 | 15,790,951.51 | 15,805,811.71 | - |
| Supplemental insurance | 106,401.57 | 106,401.57 | - | |
| On-duty injury insurance | 2,228,615.47 | 2,227,954.27 | 661.20 | |
| Maternity insurance | 1,585.09 | 1,966,737.26 | 1,968,322.35 | - |
| Housing funds | 21,190,651.04 | 20,885,458.23 | 305,192.81 | |
| Labor union and training expenses | 1,503,018.66 | 4,922,833.61 | 4,688,949.08 | 1,736,903.19 |
| Short-term leave with pay | - | - | - | |
| Short term profit share plan | - | - | - | |
| Others | 2,813,109.56 | 2,813,109.56 | - | |
| Total | 31,125,808.94 | 327,144,789.45 | 323,122,028.02 | 35,148,570.37 |
(3) Defined contribution plan
| Item | Opening balance | Increase | Decrease | Closing balance |
| Pension | 31,621,058.85 | 31,621,058.85 | - | |
| Unemployment insurance | 1,040,438.44 | 1,040,226.33 | 212.11 |
| Item | Opening balance | Increase | Decrease | Closing balance |
| Company annuity plan | - | - | - | |
| Total | 32,661,497.29 | 32,661,285.18 | 212.11 |
27. Tax payable
| Item | Closing balance | Opening balance |
| Value-added tax | 8,428,289.41 | 2,830,255.88 |
| Enterprise income tax | 825,185.23 | 3,114,706.06 |
| Real estate tax | 1,910,131.37 | 1,899,793.53 |
| Land use tax | 1,094,769.07 | 1,094,760.28 |
| Individual income tax | 471,053.12 | 216,213.81 |
| Stamp duty | 477,653.78 | 151,410.38 |
| City maintenance and construction tax | 178,955.65 | 238,887.83 |
| Education surcharge | 127,825.46 | 167,925.89 |
| River toll fee | 984.73 | 240.59 |
| Total | 13,514,847.82 | 9,714,194.25 |
28. Other accounts payable
| Item | Closing balance | Opening balance |
| Interest payable | - | 1,839,166.81 |
| Dividend payable | 3,008,156.00 | 533,156.00 |
| Other accounts payable | 52,275,984.21 | 40,645,143.57 |
| Total | 55,284,140.21 | 43,017,466.38 |
28.1 Interest payable
| Item | Closing balance | Opening balance |
| Interest on short term loan | 1,703,750.01 | |
| Interest on corporate bond | 135,416.80 | |
| Total | 1,839,166.81 |
28.2 Dividend payable
| Item | Closing balance | Opening balance |
| Ordinary share dividend | 3,008,156.00 | 533,156.00 |
| Total | 3,008,156.00 | 533,156.00 |
28.3 Other accounts payable
(1) Other payables categorized by payments nature
| Payments nature | Closing balance | Opening balance |
| Cash pledge and security deposit | 11,879,889.59 | 8,518,729.05 |
| Apply for reimbursement and unpaid | 10,784,375.08 | 11,557,803.69 |
| Receipts under custody | 2,449,487.90 | 6,191,124.03 |
| Others | 27,162,231.64 | 14,377,486.80 |
| Total | 52,275,984.21 | 40,645,143.57 |
29. Non-current liabilities due within one year
| Item | Closing balance | Opening balance |
| Bond payable due within one year | - | 25,000,034.00 |
| Long-term payable due within one year | 13,876,415.99 | 2,399,351.64 |
| Lease obligation due within one year | 10,298,972.13 | 11,098,566.54 |
| Total | 24,175,388.12 | 38,497,952.18 |
30. Other current liabilities
| Item | Closing balance | Opening balance |
| Notes payable endorsed not derecognized | 143,288,366.08 | 121,572,682.35 |
| Output Vat to be carried forward | 51,924,840.83 | 30,601,263.95 |
| Total | 195,213,206.91 | 152,173,946.30 |
31. Long-term borrowing
(1) Category of long-term borrowing
Note: In year 2016, the Development Fund from China Development Bank gave support to theCompany’s intelligent and green equipment of cold chain and service industry base project andprovided special fund to the Company’s holding shareholder, Bingshan Group. The fund is 0.15billion Yuan with 10year’s expiration at 1.2% rate. Once the fund arrived, Bingshan Group gaveit to the Company at the same rate of 1.2% in lump sum. The above fund needed to bewarranted by the Company. The guarantee seems to be given for the holding shareholder, but itis for the Company itself in fact.
32. Lease obligation
(1) Details of lease obligation
| Category | Closing balance | Opening balance |
| Lease payment | 16,861,280.02 | 27,625,677.55 |
| Less: unrecognized finance expense | 1,168,286.75 | 2,708,634.55 |
Category
| Category | Closing Balance | Opening Balance |
| Guarantee loan | 150,000,000.00 | 160,000,000.00 |
| Total | 150,000,000.00 | 160,000,000.00 |
| Category | Closing balance | Opening balance |
| Non-current liability due within 1 year | 10,298,972.13 | 11,098,566.54 |
| Net lease liability | 5,394,021.14 | 13,818,476.46 |
(2) Maturity
33. Long term accounts payable
| Item | Closing Balance | Opening Balance |
| Long term accounts payable | 19,998,913.29 | 1,964,463.77 |
| Total | 19,998,913.29 | 1,964,463.77 |
33.1Category by nature
| Nature | Closing Balance | Opening Balance |
| Financial lease borrowings | 19,998,913.29 | 1,964,463.77 |
| Total | 19,998,913.29 | 1,964,463.77 |
34. Provision
| Nature | Closing Balance | Opening Balance |
| Open litigation | 7,592,239.01 | |
| Total | 7,592,239.01 |
35. Deferred income
(1) Category of deferred income
| Item | Opening Balance | Increase | Decrease | Closing Balance |
| Government subsidy | 104,457,568.86 | 8,135,944.83 | 6,408,189.87 | 106,185,323.82 |
| Total | 104,457,568.86 | 8,135,944.83 | 6,408,189.87 | 106,185,323.82 |
(2) Government subsidy
| Category | Closing Balance |
| Minimum lease payment for an irrevocable operating lease: | |
| 1st year after balance sheet date | 11,178,301.29 |
| 2nd year after balance sheet date | 4,502,179.39 |
| 3rd year after balance sheet date | 442,954.02 |
| Subsequent years | 737,845.32 |
| Total | 16,861,280.02 |
| Government subsidy item | Opening Balance | Increase | operating income | Into other income | The value offset cost and expense this year | Closing Balance | income |
| Subsidy fund for highly effective heat pump and related system | 48,412.65 | 48,412.65 | related | ||||
| Contribution to subsidiary company relocation | 40,104,000.00 | - | - | 1,114,000.00 | - | 38,990,000.00 | related |
| Application of NH3 and CO2 instead of R22 screw refrigerating machine combined condensing unit | 16,398,350.48 | 8,135,944.83 | - | - | 2,028,323.87 | 22,505,971.44 | Related |
| Compressor IC system | 3,907,129.99 | - | - | - | 368,769.72 | 3,538,360.27 | related |
| Ultrasonic intelligent defrost technology | 3,716,010.90 | - | - | 30,000.00 | 264,833.48 | 3,421,177.42 | related/ Income |
| Eco Compressor project | 22,529,321.64 | - | - | - | 2,553,850.15 | 19,975,471.49 | related |
| R290 replacement of R22 large industrial screw unit | 13,006,663.20 | - | - | - | - | 13,006,663.20 | related |
| R290 replacement of R22 industrial double stage screw unit | 4,747,680.00 | 4,747,680.00 | related | ||||
| Total | 104,457,568.86 | 8,135,944.83 | - | 1,144,000.00 | 5,264,189.87 | 106,185,323.82 | — |
Note: Asset related grant shall be offset the cost or expense within the asset’s useful life; incomerelated grant shall be booked into other income or offset cost or expense if it is relevant to dailyactivity, otherwise it shall be booked into non-operating income.
36. Share capital
| Item | Opening balance | Increase/decrease（+、-） | Closing balance | ||||
| New share issued | Share dividend | Transfer from capital reserve | others | Subtotal | |||
| Total share capital | 843,212,507.00 | 843,212,507.00 | |||||
37. Capital reserves
| Items | Opening Balance | Increase | Decrease | Closing Balance |
| Share premium | 659,622,044.20 | 9,571,369.07 | - | 669,193,413.27 |
| Other capital reserves | 67,146,423.80 | - | 16,123,970.29 | 51,022,453.51 |
| Total | 726,768,468.00 | 9,571,369.07 | 16,123,970.29 | 720,215,866.78 |
Note1: the increased share premium of capital reserve is the amount of that the considerationpaid for purchasing minority interest of Dalian Bingshan Air-conditioning Equipment Co., Ltdis less than the share of the identifiable net asset in the subsidiary.Note2: other capital reserve decreased during the year is the dilution of shareholding from
29.21% to 21.91% due to Jiangsu Jingxue Insulation Technology Co.,Ltd new shares issued inJune in Shenzhen Stock Exchange, so goodwill and share of the net assets in Jiangsu JingxueInsulation Technology Co.,Ltd decreased.
38. Other comprehensive income
| Items | Opening Balance | Current year | Closing Balance | ||||
| Amount for the period before income tax | Less：Previously recognized in profit or loss into other comprehensive income | Less：income tax | After-tax attribute to the parent company | After-tax attribute to minority shareholder | |||
| I.Later can’t reclassified into profit and loss of other comprehensive income | |||||||
| II. Later reclassified into profit and loss of other comprehensive income | 2,501,459.77 | 322,778.04 | 2,178,681.73 | ||||
| Other comprehensive income that can be transferred to profit or loss under the equity method | 2,501,459.77 | 322,778.04 | 2,178,681.73 | ||||
| Other comprehensive income total | 2,501,459.77 | 322,778.04 | 2,178,681.73 | ||||
39. Surplus reserves
| Item | Opening Balance | Increase | Decrease | Closing Balance |
| Statutory surplus reserve | 347,216,790.47 | - | - | 347,216,790.47 |
| Discretionary surplus reserve | 449,469,025.26 | 12,785,383.91 | - | 462,254,409.17 |
| Total | 796,685,815.73 | 12,785,383.91 | - | 809,471,199.64 |
Note: The Company made FY2020 profit appropriation plan within the reporting period.According to the general meeting on May 15, 2021, 20% of net profit is provided fordiscretionary surplus reserve.
40. Undistributed profits
| Item | Current year | Last year |
| Closing balance of last year | 997,601,577.97 | 1,038,358,782.59 |
| Add: Adjustments to the opening balance of undistributed profits | -79,559,636.71 |
| Item | Current year | Last year | |
| Including: additional retrospective adjustments according to the new accounting standards | - | ||
| Change on accounting policy | - | ||
| Correction of prior period significant errors | - | ||
| Change on combination scope under same control | - | ||
| Other factors | -79,559,636.71 | ||
| Opening balance of current year | 918,041,941.26 | 1,038,358,782.59 | |
| Add: net profit attributable to shareholders of parent company in the year | -269,059,849.96 | 21,341,133.39 | |
| Less: Provision for statutory surplus reserves | - | 6,392,691.96 | |
| Provision for any surplus reserves | 12,785,383.91 | 30,409,270.84 | |
| Provision of general risk | - | ||
| Dividends payable for common shares | 8,432,125.07 | 25,296,375.21 | |
| Common stock dividends converted to equity | - | ||
| Extract employee rewards and welfare funds | - | ||
| Closing balance of current year | 627,764,582.32 | 997,601,577.97 | |
Adjustment of opening undistributed profitThe Company adopts the new financial instrument standard earlier than its affiliates.During the period when the affiliates did not adopt the new standard, the Company didnot adjust the financial statement of affiliates under equity method due to restriction tothe objective condition. In accordance with the 5th implementation feedback ofAccounting Standards for Business Enterprises in 2021 given by Accounting Division ofMinistry of Finance, the Company made an adjustment to the opening balance offinancial statements of FY 2021 under equity method as the affiliates adjusted theopening balance since January 1,2021 in accordance with the new standard.
41. Operating revenue and cost
(1) Details
| Items | Current year | Last year | ||
| Sales revenue | Cost of sales | Sales revenue | Cost of sales | |
| Revenue from principle operation | 2,031,958,305.49 | 1,808,263,206.67 | 1,680,314,480.42 | 1,401,374,951.04 |
| Revenue from other operation | 57,249,950.73 | 41,268,065.62 | 46,953,454.73 | 31,149,158.87 |
| Total | 2,089,208,256.22 | 1,849,531,272.29 | 1,727,267,935.15 | 1,432,524,109.91 |
(2) Main revenue from contract details
| Contract classification | Total |
| Classified at products type | 2,031,958,305.49 |
| Manufacture products | 1,328,371,290.81 |
| Project installation | 652,866,257.62 |
| Other products and service | 50,720,757.06 |
| Classified at geography location | 2,031,958,305.49 |
| domestic | 1,936,838,033.86 |
| overseas | 95,120,271.63 |
42. Taxes and surcharges
| Items | Current year | Last year |
| City construction tax | 2,697,059.55 | 1,611,470.71 |
| Education surcharge | 1,937,881.46 | 1,147,208.51 |
| Property tax | 7,889,230.05 | 7,337,286.22 |
| Land use tax | 4,770,267.58 | 4,068,191.93 |
| Vehicle and vessel tax | 1,628,433.67 | 1,253,726.37 |
| Stamp duty | 25,419.48 | 31,694.48 |
| Others | 3,559.17 | 6,534.92 |
| Total | 18,951,850.96 | 15,456,113.14 |
43. Selling expenses
| Items | Current year | Last year |
| Employee benefit | 79,027,032.72 | 40,196,358.86 |
| Official business expense | 17,287,793.62 | 14,256,723.26 |
| Maintenance and repair expense | 10,817,179.44 | 5,527,611.04 |
| Travel expense | 9,309,818.45 | 10,998,391.78 |
| Business entertaining expense | 9,790,470.43 | 9,966,831.47 |
| Advertisement and bids expense | 2,335,235.14 | 2,139,949.39 |
| Depreciation expense | 1,781,527.37 | 227,836.85 |
| Other expense | 284,852.13 | 426,774.25 |
| Total | 130,633,909.30 | 83,740,476.90 |
44. Administrative expenses
| Items | Current year | Last year |
| Employee benefit | 104,074,747.58 | 101,631,233.81 |
| Official expense | 17,723,620.65 | 17,274,897.46 |
| Depreciation expense | 12,382,260.68 | 10,423,498.19 |
| Maintenance and repair expense | 8,501,811.94 | 6,754,128.80 |
| Items | Current year | Last year |
| Long-term assets amortization | 7,564,598.02 | 7,508,381.76 |
| Travel expense | 5,387,065.85 | 2,885,657.48 |
| Design consultant and test service expense | 4,398,890.50 | 5,024,778.03 |
| Safety production cost | 3,799,007.87 | 3,239,077.20 |
| Business entertaining expense | 2,248,318.02 | 2,335,952.36 |
| Insurance expense | 931,137.81 | 764,446.72 |
| Advertisement expense | 875,051.39 | 364,933.57 |
| Transportation expense | 671,904.44 | 702,607.23 |
| Other taxes and fee | 559,693.52 | 83,529.05 |
| Other expense | 1,495,327.88 | 1,302,248.87 |
| Total | 170,613,436.15 | 160,295,370.53 |
45. Technology development expense
| Items | Current year | Last year |
| Employee benefit | 46,269,704.41 | 38,877,014.74 |
| Raw material | 11,493,089.36 | 4,479,120.55 |
| Depreciation and amortization expense | 4,541,949.24 | 4,524,355.03 |
| Other expense | 2,965,022.22 | 1,277,766.46 |
| Total | 65,269,765.23 | 49,158,256.78 |
46. Financial expenses
| Items | Current year | Last year |
| Interest expenses | 16,718,288.26 | 22,795,380.51 |
| Less: interest income | 5,193,155.75 | 2,435,386.06 |
| Add: exchange loss | -898,833.22 | 3,199,444.76 |
| Add: others expenditure | 3,315,626.94 | 2,919,870.16 |
| Total | 13,941,926.23 | 26,479,309.37 |
47. Other income
| Items | Current year | Last year |
| Government subsidy | 10,728,811.44 | 18,938,565.95 |
| Personal income tax handling fee refund | 70,983.39 | 688,552.44 |
| Job stability subsidy | - | 477,452.00 |
| Total | 10,799,794.83 | 20,104,570.39 |
48. Investment income
| Items | Current year | Last year |
| Long-term equity investment gain under equity method | -85,710,592.25 | 79,024,253.68 |
| Gain from disposal of long-term equity investment | 27,665,072.62 | 12,859,589.96 |
| Gain from holding of tradable financial assets | ||
| Gain from disposal of tradable financial assets | ||
| Gain from FV remeasurement of the remaining shares after losing control | ||
| Gain from holding of other noncurrent financial assets | 7,255,249.48 | 5,372,826.87 |
| Gain from disposal of other no-ncurrent financial assets | 2,523,680.32 | 7,180,485.22 |
| Gain on Debt restructuring | 819,297.68 | |
| Total | -47,447,292.15 | 104,437,155.73 |
49. Gain on fair value change
| Source of gain on FV change | Current year | Last year |
| Other noncurrent financial assets | 52,398,565.78 | -14,797,607.68 |
| Total | 52,398,565.78 | -14,797,607.68 |
50. Credit impairment loss (loss listed as“-“)
| Items | Current year | Last year |
| Credit impairment loss on notes receivable | 2,055,299.46 | 1,310,734.78 |
| Credit impairment loss on receivable | -97,597,742.66 | -20,792,681.30 |
| Credit impairment loss on other receivable | 107,768.08 | -6,016,822.24 |
| Credit impairment loss on long term receivable | 4,636,661.13 | -9,218,793.44 |
| Total | -90,798,013.99 | -34,717,562.20 |
51. Assets impairment losses (loss listed as “-“)
| Items | Current year | Last year |
| Loss of contract asset impairment | -3,296,146.61 | -5,065,258.60 |
| Loss on impairment of inventory and cost to fulfill the contract obligation | -46,330,540.22 | -8,411,139.41 |
| Total | -49,626,686.83 | -13,476,398.01 |
52. Gain on assets disposal (loss listed as “-“)
| Item | Current year | Last year | Amounts recognized into current non-recurring profit or loss |
| Gain on non-current assets disposal | 59,272.29 | -169,550.05 | 59,272.29 |
| Including: gain on non-current assets disposal not classified as held for sale | 59,272.29 | -169,550.05 | 59,272.29 |
| Including: gain on fixed | 59,272.29 | -169,550.05 | 59,272.29 |
| assets disposal | |||
| Total | 59,272.29 | -169,550.05 | 59,272.29 |
53. Non-operating income
（1） Non-operating income list
| Item | Current year | Last year | Amounts recognized into non-recurring profit or loss for the year |
| Gain on debts restructuring | - | 681,549.89 | - |
| Other items | 1,491,460.42 | 729,839.86 | 1,491,460.42 |
| Contract withdrawn and received in advance transferred to non-operating income | 2,983,246.50 | - | 2,983,246.50 |
| Total | 4,474,706.92 | 1,411,389.75 | 4,474,706.92 |
54. Non-operating expenses
| Item | Current year | Last year | Amounts recognized into non-recurring profit or loss for the year |
| Non-current assets scrap loss | 1,474,287.01 | 238,773.51 | 1,474,287.01 |
| Outward donation | 60,000.00 | 60,000.00 | 60,000.00 |
| Expected loss for open litigation | - | 7,592,239.01 | - |
| Compensation | 7,680,000.00 | 7,680,000.00 | |
| Inventory shortage | 2,303.16 | 2,303.16 | |
| Others | 402,800.25 | 250,241.11 | 402,800.25 |
| Total | 9,619,390.42 | 8,141,253.63 | 9,619,390.42 |
55. Income tax expenses
(1) Income tax expenses
| Items | Current year | Last year |
| Current income tax expenses | 3,010,709.68 | 7,201,935.68 |
| Deferred income tax expenses | -17,314,063.15 | -15,786,702.19 |
| Total | -14,303,353.47 | -8,584,766.51 |
(2) Adjustment process of accounting profit and income tax expense
| Items | Current year |
| Items | Current year |
| Consolidated total profit this year | -289,492,947.51 |
| Income tax expenses at applicable tax rate | -43,423,942.13 |
| Effect on subsidiary applied to different tax rate | -14,992,264.33 |
| Effect on prior period income tax | 479,768.28 |
| Effect on non-taxable income | |
| Effect on non-deductible cost, expense and loss | 22,098,662.07 |
| Effect on use of deductible loss from unrecognized deferred tax assets in the prior period | -1,819,963.78 |
| Effect on temporary difference or deductible loss from unrecognized deferred tax assets this year | 31,231,561.02 |
| Effect on deduction/ exemption of income tax | |
| R&D expenditure accelerated deduction | -7,877,174.60 |
| Income tax expense | -14,303,353.47 |
56. Other comprehensive income
Refer to the note “VI.38 Other comprehensive income” for details.
57. Notes to cash flow statement
(1) Cash receipt/payment of other operating/investing/financing activities
1) Other cash received relating to operating activities
| Items | Current year | Last year |
| Government grants | 14,489,543.00 | 24,996,436.54 |
| Received travel expense refund | 2,497,395.96 | 4,828,777.61 |
| Deposit given back | 41,513,085.25 | 36,950,909.92 |
| Receivable from relate party | - | 11,000,000.00 |
| Interest income | 4,037,645.63 | 2,637,279.19 |
| Receivable from the 3rd party | - | 177,570.52 |
| Others | 1,755,419.70 | 1,525,094.13 |
| Total | 64,293,089.54 | 82,116,067.91 |
2) Other cash paid relating to operating activities
| Items | Current year | Last year |
| Business travel borrowing | 9,534,563.41 | 7,009,973.81 |
| Deposit paid | 42,860,074.05 | 47,940,846.54 |
| Expenditure | 91,537,037.91 | 74,311,911.83 |
| Unsettled AR/AP among related party | 11,027,444.39 | 11,000,000.00 |
| Bank handling charges | 3,024,534.78 | 2,375,268.90 |
| Others | 4,592,818.07 | 4,342,577.27 |
| Items | Current year | Last year |
| Total | 162,576,472.61 | 146,980,578.35 |
3) Others cash received relating to financing activities
| Items | Current year | Last year |
| Collection of guarantee money at the year end | 56,369,665.56 | 30,591,791.66 |
| Sale leaseback and financial lease | 27,476,663.49 | 25,898,027.71 |
| Total | 83,846,329.05 | 56,489,819.37 |
4) Others cash paid relating to financing activities
| Items | Current year | Last year |
| Payment of guarantee money | 75,003,788.58 | 56,369,665.56 |
| Sale& leaseback and financial lease | 22,971,894.19 | 21,827,295.59 |
| Purchase of minority interest | 8,765,615.00 | |
| lease premium | 5,246,090.60 | |
| Total | 111,987,388.37 | 78,196,961.15 |
(2) Supplementary information of consolidated cash flow statement
| Items | Current year | Last year |
| 1. Adjusting net profit into cash flows of operating activities: | —— | —— |
| Net profit | -275,189,594.04 | 22,849,809.33 |
| Add: Provision for impairment of assets | 49,626,686.83 | 13,476,398.01 |
| Provision for impairment of credit | 90,798,013.99 | 34,717,562.20 |
| Depreciation of fixed assets, Amortization of mineral resources, and biological assets | 85,379,019.94 | 76,389,416.86 |
| Depreciation of right-of-use assets | 5,557,030.56 | |
| Amortization of intangible assets | 7,903,250.51 | 6,731,291.97 |
| Amortization of long-term deferred expenses | 1,571,853.84 | 1,986,307.40 |
| Losses on disposal of fixed assets, intangible assets, and long-term assets (income listed with”-”) | -59,272.29 | 169,550.05 |
| Losses on write-off of fixed assets (income listed with”-”) | 1,536,590.17 | 238,773.51 |
| Change of fair value profit or loss | -52,398,565.78 | 14,797,607.68 |
| Financial expense (income listed with”-”) | 18,951,092.91 | 22,795,380.51 |
| Investment loss (income listed with”-”) | 47,447,292.15 | -104,437,155.73 |
| Decrease of deferred tax assets(increase listed with”-”) | -20,900,048.02 | -6,581,861.03 |
| Increase of deferred tax liabilities(decrease listed with”-”) | 3,585,984.87 | -9,204,841.16 |
| Items | Current year | Last year |
| Decrease of inventories (increase listed with”-”) | -324,479,019.61 | -180,341,865.83 |
| Decrease of operating receivables (increase listed with”-”) | -45,570,227.23 | -61,894,148.27 |
| Increase of operating payables (decrease listed with”-”) | 407,758,129.57 | 155,165,347.05 |
| Others | - | |
| Net cash flows arising from operating activities | 1,518,218.37 | -13,142,427.45 |
| 2. Significant investment and financing activities unrelated to cash income and expenses | ||
| Liabilities transferred to capital | - | |
| Convertible bonds within 1 year | - | 25,000,034.00 |
| Financing leased fixed assets | - | |
| 3. Net increase (decrease) of cash and cash equivalent | ||
| Closing balance of cash | 438,969,337.87 | 314,978,460.49 |
| Less: Opening balance of cash | 314,978,460.49 | 301,527,354.56 |
| Add: Closing balance of cash equivalent | ||
| Less: Opening balance of cash equivalent | ||
| Net increase of cash and cash equivalent | 123,990,877.38 | 13,451,105.93 |
(3) Cash and cash equivalents
| Items | Current year | Last year |
| Cash | 438,969,337.87 | 314,978,460.49 |
| Including: Cash on hand | 99,580.64 | 154,668.54 |
| Bank deposit used for paying at any moment | 438,869,757.23 | 314,823,791.95 |
| Other monetary fund for paying at any moment | - | |
| Deposit fund in central bank available for payment | - | |
| Cash equivalent | ||
| Including: bonds investment with maturity in 3 months | - | |
| Closing balance of cash and cash equivalents | 438,969,337.87 | 314,978,460.49 |
| Cash and cash equivalents restricted in the parent company or subsidiary | - |
58. The assets with the ownership or use right restricted
| Items | Current year | Reasons |
| Monetary fund | 83,689,167.92 | Guarantee money frozen fund |
| Notes Receivable | 6,420,000.00 | Pledge |
| Fixed asset | 89,417,838.05 | Pledge |
| Items | Current year | Reasons |
| Investment asset | 38,955,728.90 | Pledge |
| Intangible asset | 8,266,573.44 | Pledge |
Note: The bank account of Dalian Bingshan Group Sales Co., Ltd is frozen due to litigations,the amount is 3,407,480.07 Yuan. Dalian Bingshan Group Engineering Co., Ltd ’s bank accountis frozen due to litigations, the amount is 900,000 Yuan.Dalian Niweisi LengNuan Techonoligy Co., Ltd. pledged the bank acceptance note to ChinaMerchants bank Dalian Branch as guarantee for issuing the commercial acceptance note.Dalian Xinminghua Electrical Technology Co., Ltd. pledged the bank acceptance note to ChinaMerchants bank Dalian Jinpu Branch as guarantee for issuing the commercial acceptance note.Dalian Bingshan Air-conditioning Equipment Co., Ltd. pledged the bank acceptance note toICBC bank Dalian DDZ Branch as guarantee for issuing the commercial acceptance note.The Company’s subsidiary, Wuhan New World Refrigeration Industry Co., LTD., mortgaged itsfixed assets, intangible assets and the investment real estate to China EverBright Bank Co.,LTD., Wuhan Branch, as an integrated limit of credit used for local and foreign loans, tradefinancing, discount, acceptance, letter of credit, letter of guarantee, factoring, guarantee andother specific credit business.
59. Monetary category of foreign currency
(1) Monetary category of foreign currency
| Item | Closing Balance (foreign currency) | Exchange Rate | Closing Balance (RMB) |
| Cash | 2,660,385.74 | ||
| Including：USD | 409,800.64 | 6.3757 | 2,612,773.25 |
| GBP | 0.10 | 8.6064 | 0.86 |
| JPY | 859,183.00 | 0.055415 | 47,611.63 |
| Accounts receivable | 29,819,217.13 | ||
| Including: USD | 4,254,703.76 | 6.3757 | 27,126,714.76 |
| GBP | 170,311.86 | 8.6064 | 1,465,771.99 |
| JPY | 22,137,154.00 | 0.055415 | 1,226,730.38 |
| Accounts payable | 5,104,241.14 | ||
| Including: USD | 734,147.40 | 6.3757 | 4,680,703.58 |
| Euro | 1,330.00 | 7.2197 | 9,602.20 |
| GBP | 37,274.28 | 8.6064 | 320,797.36 |
| JPY | 1,720,000.00 | 0.055415 | 93,138.00 |
60. Government Grants
(1) Basic information
| Category | Amount | Disclosure | Amount recognized in current profit and loss |
| Efficiency pump and its supporting systems | 7,800,000.00 | Deferred income/cost of sales/expense | 48,412.65 |
| Relocation compensation | 42,332,000.00 | Deferred income/other income | 1,114,000.00 |
| Application of combined compression NH3&Co2 replace R22 | 29,409,622.81 | Deferred income/cost of sales/expense | 2,028,323.87 |
| Refrigeration Compressor Intelligent Manufacturing System Fund | 5,000,000.00 | Deferred income/cost of sales/expense | 368,769.72 |
| Ultrasonic defrosting technology | 9,841,800.00 | Deferred income/cost of sales/expense/other income | 294,833.48 |
| Environmental protection and energy saving refrigeration and air conditioning compressor technology industrialization project | 31,000,000.00 | Deferred income/cost of sales/expense | 2,553,850.15 |
| R290 replace R22 | 13,006,663.20 | Deferred income | - |
| R290 replace R22 twin stage screw sets | 4,747,680.00 | Deferred income | - |
| R22 update | 4,675,798.59 | Other Income | 4,675,798.59 |
| Dalian Jinpu Finance Center-after R&D investment subsidy | 1,544,700.00 | Other Income | 1,544,700.00 |
| High-tech enterprise recognition subsidy | 793,000.00 | Other Income | 793,000.00 |
| Xiaojuren subsidy of Dalian industry & information bureau | 600,000.00 | Other Income | 600,000.00 |
| R&D subsidy of Dongkejing No.2021-28 | 568,800.00 | Other Income | 568,800.00 |
| Subsidy of FY2021 | 400,000.00 | Other Income | 400,000.00 |
| Export credit insurance premium support fund | 263,500.00 | Other Income | 263,500.00 |
| Vocational skills training subsidies | 234,810.00 | Other Income | 234,810.00 |
| Technology reward of 2020-Dalian Science Technology Bureau | 200,000.00 | Other Income | 200,000.00 |
| Service standardized subsidy by Liaoning | 150,000.00 | Other Income | 150,000.00 |
| Category | Amount | Disclosure | Amount recognized in current profit and loss |
| Market Supervision Administration | |||
| Manufacture innovation center special funds | 80,000.00 | Other Income | 80,000.00 |
| Others | 74,202.85 | Other Income | 74,202.85 |
| Total | 152,722,577.45 | - | 15,993,001.31 |
VII. Change of Consolidation ScopeThere are no changes in scope of consolidationVIII. Interest in other entity
1. Equity of subsidiaries
(1) Organization structure of group company
| Name of subsidiaries | Main business address | Registered address | Business nature | Shareholding (%) | Obtaining method | |
| Direct | Indirect | |||||
| Dalian Bingshan Group Engineering Co., Ltd. | Dalian | Dalian | Installation | 100 | Establish | |
| Dalian Bingshan Group Sales Co., Ltd. | Dalian | Dalian | Trading | 100 | Establish | |
| Dalian Bingshan Air-conditioning Equipment Co., Ltd. | Dalian | Dalian | Manufacturing | 100 | Establish | |
| Dalian Bingshan JiaDe Automation Co., Ltd. | Dalian | Dalian | Manufacturing | 100 | Establish | |
| Dalian Bingshan Lingshe Quick Freezing Equipment Co., Ltd. | Dalian | Dalian | Manufacturing | 100 | Establish | |
| Wuhan New World Refrigeration Industrial Co., Ltd. | Wuhan | Wuhan | Manufacturing | 100 | Acquisition | |
| Bingshan Technical Service （Dalian） Co.,Ltd. | Dalian | Dalian | Services | 100 | Establish | |
| Dalian Xinminghua Electrical Technology | Dalian | Dalian | Electronic | 100 | Acquisition | |
| Name of subsidiaries | Main business address | Registered address | Business nature | Shareholding (%) | Obtaining method | |
| Co., Ltd | ||||||
| Dalian Niweisi LengNuan Technology Co., Ltd. | Dalian | Dalian | Manufacturing | 55 | Acquisition | |
| Dalian Bingshan International Trading Company | Dalian | Dalian | Service | 100 | Acquisition | |
| Wuhan New World Air-conditioning Refrigeration Engineering Co., Ltd | Wuhan | Wuhan | Installation | 100 | Establish | |
| Wuhan Lanning Energy Technology Co., Ltd. | Wuhan | Wuhan | Trading | 54.55 | Acquisition | |
| Ningbo Bingshan Air-conditioning Refrigeration Engineering Co., Ltd | Ningbo | Ningbo | Installation | 51 | Establish | |
| Chengdu Bingshan Refrigeration Engineering Co., Ltd. | Chengdu | Chengdu | Services | 51 | Establish | |
1) All the proportion of shareholding in subsidiaries were the same with voting right.
2) The Company held over 50% voting right in subsidiaries and could control thesesubsidiaries with over 50% voting right.
(2) There are no significant non-subsidiaries.
2. Equity in joint venture arrangement or associated enterprise
（1） The important affiliated companies
| Name of joint ventures or affiliated companies | Main business address | Registered address | Business nature | Shareholding (%) | Accounting methods | |
| Direct | Indirect | |||||
| Panasonic Cold-chain (Dalian) Co., Ltd | Dalian | Dalian | Manufacturing | 40 | Equity method | |
| Name of joint ventures or affiliated companies | Main business address | Registered address | Business nature | Shareholding (%) | Accounting methods | |
| Direct | Indirect | |||||
| Dalian Fuji Bingshan Vending Machine Co., Ltd | Dalian | Dalian | Manufacturing | 49 | Equity method | |
| Panasonic Compressor (Dalian) Co., Ltd | Dalian | Dalian | Manufacturing | 40 | Equity method | |
| Jiangsu Jingxue Insulation Technology Co.,Ltd | Changzhou | Changzhou | Manufacturing | 21.91 | Equity method | |
| Dalian Bingshan Metal Technology Co., Ltd. | Dalian | Dalian | Manufacturing | 49.00 | Equity method | |
1) The Company has the same percentage of shareholding and voting right in joint-venture or
affiliated company.
2) The Company doesn’t have affiliated company which has significant influence although beingheld less than 20% voting rights.
3) The Company doesn’t have joint venture or affiliated companies which have no significant
influence although being held 20% or more voting rights.
(2) The key financial information of affiliated companies
| Items | Closing balance/Current year | ||||
| Dalian Fuji Bingshan Vending Machine Co., Ltd | Panasonic Cold-chain (Dalian) Co., Ltd | Panasonic Compressor (Dalian) Co., Ltd | Jiangsu Jingxue Insulation Technology Co.,Ltd | Dalian Bingshan Metal Technology Co., Ltd. | |
| Current assets | 519,702,256.24 | 1,581,760,317.20 | 1,277,834,286.47 | 1,288,722,048.45 | 330,379,711.49 |
| Including: Cash and cash equivalents | 41,894,346.04 | 22,381,748.30 | 112,967,780.24 | 197,139,783.12 | 133,070,727.90 |
| Non-current assets | 234,103,971.93 | 290,838,647.69 | 307,229,051.83 | 235,300,482.93 | 39,596,544.29 |
| Total assets | 753,806,228.17 | 1,872,598,964.89 | 1,585,063,338.30 | 1,524,022,531.38 | 369,976,255.78 |
| Current liabilities | 373,521,152.88 | 1,051,572,145.31 | 396,672,114.65 | 709,690,258.17 | 65,843,251.71 |
| Non-current liabilities | 4,618,886.45 | 12,302,083.99 | 29,936,172.21 | 29,832,096.59 | - |
| Total liabilities | 378,140,039.33 | 1,063,874,229.30 | 426,608,286.86 | 739,522,354.76 | 65,843,251.71 |
| Minority interests | - | - | - | 484,306.52 | - |
| Equity to the parent company | 375,666,188.84 | 214,723,516.35 | 1,156,846,384.28 | 784,015,870.10 | 304,133,004.07 |
| Net assets calculated according to the shareholding proportions | 148,440,479.34 | 85,889,406.54 | 462,738,553.71 | 171,770,036.98 | 149,025,171.99 |
| Adjusting events | - | - | - | - | - |
| —Goodwill | 226,689.29 | 4,440,630.89 | - | 29,961,491.06 | 19,269,770.94 |
| —Unrealized profits of insider trading | - | - | - | - | - |
| --Others | -11,153.88 | - | -2,678,304.22 | - | |
| Items | Closing balance/Current year | ||||
| Dalian Fuji Bingshan Vending Machine Co., Ltd | Panasonic Cold-chain (Dalian) Co., Ltd | Panasonic Compressor (Dalian) Co., Ltd | Jiangsu Jingxue Insulation Technology Co.,Ltd | Dalian Bingshan Metal Technology Co., Ltd. | |
| Book value of equity investment of affiliated companies | 148,656,014.75 | 90,330,037.43 | 460,060,249.49 | 201,731,528.04 | 168,294,942.93 |
| Fair value of equity investment with public offer | - | - | - | - | - |
| Operating income | 239,782,015.85 | 1,513,254,711.28 | 1,117,036,108.61 | 914,019,079.37 | 467,909,048.44 |
| Financial expense | 5,192,848.35 | 24,987,011.19 | 1,116,677.52 | 1,535,270.95 | -961,474.38 |
| Income tax expense | 30,729.79 | -27,060,054.40 | 11,921,990.57 | 9,147,959.86 | 7,639,671.65 |
| Net profit | 284,537.72 | -282,147,957.09 | 83,697,007.01 | 67,100,790.28 | 48,486,526.57 |
| Net profit of discontinuing operation | - | - | - | - | - |
| Other comprehensive income | - | - | - | - | - |
| Total comprehensive income | 284,537.72 | -282,147,957.09 | 83,697,007.01 | 67,100,790.28 | 48,486,526.57 |
| The current dividends received from joint ventures | - | 2,797,849.22 | 32,773,200.00 | - | 28,648,633.78 |
(Continued)
| Items | Opening balance/Last year |
| Dalian Fuji Bingshan Vending Machine Co., Ltd | Panasonic Cold-chain (Dalian) Co., Ltd | Panasonic Compressor (Dalian) Co., Ltd | Jiangsu Jingxue Insulation Technology Co.,Ltd | Dalian Bingshan Metal Technology Co., Ltd. | |
| Current assets | 499,408,572.43 | 1,315,768,176.02 | 1,245,467,964.26 | 858,059,356.79 | 499,408,572.43 |
| Including: Cash and cash equivalents | 64,731,708.77 | 55,444,887.64 | 146,464,797.70 | 163,037,732.91 | 191,576,206.68 |
| Non-current assets | 252,283,994.86 | 238,629,720.75 | 309,811,760.93 | 192,469,083.17 | 44,431,510.18 |
| Total assets | 751,692,567.29 | 1,554,397,896.77 | 1,555,279,725.19 | 1,050,528,439.96 | 377,420,835.98 |
| Current liabilities | 359,742,781.58 | 1,048,933,029.30 | 366,066,971.54 | 478,133,992.64 | 63,065,326.29 |
| Non-current liabilities | 16,568,134.59 | - | 18,343,806.70 | 13,138,693.27 | - |
| Total liabilities | 376,310,916.17 | 1,048,933,029.30 | 384,410,778.25 | 491,272,685.91 | 63,065,326.29 |
| Minority interests | - | - | - | 375,245.30 | |
| Equity to the parent company | 375,381,651.12 | 505,464,867.47 | 1,161,637,377.27 | 558,880,508.75 | 314,355,509.69 |
| Net assets calculated according to the shareholding proportions | 183,937,009.05 | 202,185,946.99 | 464,654,950.91 | 163,260,174.22 | 154,034,199.75 |
| Adjusting events | - | - | - | - | - |
| —Goodwill | 226,689.29 | 4,440,630.89 | - | 39,948,654.75 | 19,269,770.94 |
| —Unrealized profits of insider trading | - | - | - | - | - |
| --Others | - | -639,508.39 | -2,621,843.60 | - | -145,424.54 |
| Book value of equity investment of affiliated companies | 184,454,138.22 | 205,987,069.49 | 462,033,107.31 | 203,208,828.97 | 173,158,546.15 |
| Fair value of equity investment with public offer | - | - | - | - | - |
| Operating income | 217,703,041.83 | 1,393,251,936.08 | 905,805,839.02 | 772,785,891.15 | 405,008,117.04 |
| Items | Opening balance/Last year | ||||
| Dalian Fuji Bingshan Vending Machine Co., Ltd | Panasonic Cold-chain (Dalian) Co., Ltd | Panasonic Compressor (Dalian) Co., Ltd | Jiangsu Jingxue Insulation Technology Co.,Ltd | Dalian Bingshan Metal Technology Co., Ltd. | |
| Financial expense | 3,239,090.65 | 26,378,537.05 | -1,428,218.52 | 1,660,123.13 | -2,347,078.64 |
| Income tax expense | - | -497,086.07 | 10,206,548.28 | 8,171,271.84 | 9,841,964.14 |
| Net profit | -18,525,706.44 | 19,984,637.30 | 81,932,612.51 | 60,206,578.50 | 59,356,953.86 |
| Net profit of discontinuing operation | - | - | - | - | - |
| Other comprehensive income | - | - | - | - | - |
| Total comprehensive income | -18,525,706.44 | 19,984,637.30 | 81,932,612.51 | 60,206,578.50 | 59,356,953.86 |
| The current dividends received from joint ventures | - | - | 36,026,000.00 | - | 28,510,920.84 |
(3) Summary financial information of insignificant affiliated companies
| Items | Current year | Last year |
| Affiliated company | ||
| Total book value of investment of affiliated companies | 158,059,185.33 | 364,039,638.82 |
| The total of following items according to the shareholding proportions | ||
| Net profit | 2,067,871.70 | -61,011,181.99 |
| Other comprehensive income | - | - |
| Total comprehensive income | 2,067,871.70 | -61,011,181.99 |
(4) Significant restrictions of the ability of affiliated companies transferring funds to the
Company.No.
(5) Contingency related to joint venture or affiliated company need to be disclosed.
No.IX. Risk Related to Financial InstrumentsThe main financial instruments held by the Company are borrowings, accounts receivable,accounts payable, other non-current financial asset etc. The detailed explanation is referred tothe note No.VI. The related risks of these financial instruments and the risk management policyconducted to reduce these risks by the Company are introduced as below. The Companymanagement conducts to manage and monitor these risks exposure and control these risks undercertain risk level.
1. Objectives and policies of each risk management
The objectives of risk management conducted by the Company are to reach the balance betweenrisk and profit return by reducing the negative influence to operating performance to theminimum level as well as maximizing the shareholders’ and other investors’ profits. Based onthese objectives, the basic risk management policy is to recognize and analyze all sorts of riskthat the Company faced with, to set up the proper risk tolerance bottom line conducting riskmanagement, as well as to monitor these risks in a timely and effective manner, and to ensurethese risks under the limit level.
(1) Market risk
1) Exchange rate risk
Most of the Company’s business is located in China, and settled with RMB. But the Company
defined exchange rate risk of assets, liabilities dominated in foreign currency and futuretransaction dominated in foreign currency (mainly including USD, JPY, EURO,HKD and GBP).The financial department of the Company monitors the Company’s foreign currency transactionand the scale of foreign assets and liabilities, and decreases exchange rate risk. During thecurrent year the Company did not agree any forward foreign exchange contract or currencyswap contract .As at 31st December 2021, the Company’s assets and liabilities dominated inforeign currency are listed in RMB as following：
| Items | Closing Balance | Opening balance |
| Monetary fund-USD | 2,612,773.25 | 15,790,643.22 |
| Monetary fund-JPY | 47,611.63 | 2,714,504.45 |
| Monetary fund-GBP | 0.86 | 66.32 |
| Receivable- GBP | 1,465,771.99 | 1,331,614.56 |
| Receivable -USD | 27,126,714.76 | 34,739,431.77 |
| Receivable -JPY | 1,226,730.38 | 2,162,789.04 |
| Payables -USD | 4,680,703.58 | 6,553,114.36 |
| Payables - EURO | 9,602.20 | 148,041.19 |
| Payables -JPY | 93,138.00 | 2,526,739.93 |
| Payables - GBP | 320,797.36 |
The Company paid close attention to the effect on FX risk.
2) Interest rate risk
The interest risk of the Company incurred from bank loan, risk of a floating interest rate of financialliabilities that lead to the Company facing cash flow interest rate risk, financial liabilities with a fixedinterest rate lead to the Company facing cash flow interest rate risk. The company determined theproportion of fixed interest rate and floating interest rate according the current market circumstance. TheCompany and Dalian Bingshan Group Co., Ltd borrowed long-term loan RMB 150,000,000.00 withfixed interest rate.The financial department of the Company continuously monitors the interest rates level, and themanagement would make some adjustment to lower the interest rate risk according to the latest marketsituation. Climbing interest rate will increase the cost of newly increased interest-bearing liability andinterest expense for unsettled interest-bearing liability at floating rate and have adverse effect on thebusiness performance.The sensitive analysis：
As at 31st December 2021, based on the assumption of interest rate change of 50 BP, the Company’s netprofit of current year will increase or decrease1. 3946 million Yuan.
3) Price risk
The price risk of the Company is mainly commodity price risk. The Company sells products at marketprices. As the national economy enters the "new normal", the manufacturing industry is under greateconomic downward pressure, and the drastic fluctuations of bulk material prices have a certain impacton the Company's operations.
(2) Credit risk
The credit risk of the Company comes from monetary fund, notes receivable, accounts receivable, andother accounts receivable etc. The management made credit policies and monitored changes of thiscredit exposure.The Company's monetary fund was in bank with higher credit rating, so there was no significant creditrisk, nor significant losses due to the default of other entity. Upper limit policy is adopted to avoid anycredit risk from financial institution.The Company made relevant policy to control credit risk exposure from receivable, other receivable andnotes receivable. The Company assesses the client’s credit background according to the client’s financialperformance, possibility of obtaining guarantee from the 3rd party, credit record and other factors suchas current market. The Company will periodically monitor the credit situation of the client and will takemeasures such as prompt letter, shorten credit period or cancel the credit to ensure the overall credit riskwithin the controllable scope.As at 31st December 2021, the top five customers of receivable accounts balance are161,789,114.22Yuan.
(3) Liquidity risk
Liquidity risk was referred to the risk of shortage of funds incurred when the enterprise fulfill theobligation of settlement by cash or other financial assets. The way to manage the liquidity risk is toensure enough fund available to fulfill the liability by due date in prevention from unacceptable loss ofor reputation damage to the Company. The Company periodically analyze the liability structure andexpiry date and the financial department of the Company continued to monitors the short term orlong-term capital needs to ensure maintain plenty of cash flow. And the same time they also monitor thecondition of bank loan agreements and obtain commitments from banks to reduce liquidity risks.The fund mainly comes from bank loan. By December 31
st
, 2021, the credit limit still available is 468.95million Yuan and short-term credit limit available is 468.95 million Yuan.As at 31st December 2021, the Company’s financial assets and financial liabilities in line with nondiscounted cash flow of the contracts as following： Currency unity:10kYuan
| Items | Within 1 year | 1-2 years | 2-5 years | Over 5 years | Total |
| Financial Assets | |||||
| Cash and cash in bank | 52,265.85 | - | - | - | 52,265.85 |
| Notes receivable | 16,643.04 | - | - | - | 16,643.04 |
| Accounts receivable | 82,154.87 | - | - | - | 82,154.87 |
| Financing receivable | 4,370.43 | - | - | - | 4,370.43 |
| Other Receivable | 6,034.01 | - | - | - | 6,034.01 |
| Contract asset | 10,985.97 | - | - | - | 10,985.97 |
| Non-current asset due within 1 year | 1,499.10 | - | - | - | 1,499.10 |
| Other noncurrent financial asset | - | - | - | 26,141.07 | 26,141.07 |
| Financial Liabilities | |||||
| Short-term loan | 24,593.71 | - | - | - | 24,593.71 |
| Notes Payable | 38,003.30 | - | - | - | 38,003.30 |
| Accounts payable | 91,987.19 | - | - | - | 91,987.19 |
| Other payable | 5,528.41 | - | - | - | 5,528.41 |
| Employee’s payable | 3,514.88 | - | - | - | 3,514.88 |
| Tax payable | 1,351.48 | - | - | - | 1,351.48 |
| Non-current liability due within 1 year | 2,417.54 | - | - | - | 2,417.54 |
| Long-term loan | - | - | 15,000.00 | - | 15,000.00 |
| Lease obligation | - | 333.39 | 169.12 | 36.89 | 539.40 |
| Long-term payable | - | - | 1,999.89 | - | 1,999.89 |
X. Disclosure of Fair Value
1. Amount and measurement level of the assets and liabilities measured at fair value at the year
end
| Items | Fair value at the year end | |||
| First level measurement of fair value | Second level measurement of fair value | Third level measurement of fair value | Total | |
| Financial assets Continuously measured at FV available for sale | — | — | — | — |
| Items | Fair value at the year end | |||
| First level measurement of fair value | Second level measurement of fair value | Third level measurement of fair value | Total | |
| Receivable financing | - | 43,704,310.38 | - | 43,704,310.38 |
| Other non-current financial asset | 200,547,043.12 | - | 60,863,621.49 | 261,410,664.61 |
| Total | 200,547,043.12 | 43,704,310.38- | 60,863,621.49 | 305,114,974.99 |
2. Basis for Market price of first level measurement of fair value
Equity instrument portion of the other noncurrent financial asset is measured at the unadjustedclosing quoted price on stock market on December 31, 2021.
3. For continuous and discontinuous 2nd level of FV, valuation technique adopted and keyparameter quantitive and qualitive information.Bank acceptance notes (receivable financing) as measured at fair value through othercomprehensive income is within this scope. Bank acceptance notes held by the Companymainly are high credit grading from the large commercial bank. As the remaining maturity isshort and credit risk is very low, on the balance sheet date, the book value of bank acceptancenotes receivable is similar to fair value.
4. For continuous and discontinuous 3rd level of FV, valuation technique adopted and keyparameter quantitive and qualitive information.The share investment in the non-listed company is within this scope, where neither activemarket for invested company’s share nor market price is available for reference, and it is notfeasible to obtain the relevant observable input value. The Company adopts the 3
rdlevelunobservable input to measure FV, which is the comparable company’s share price to bookvalue method together with liquidity factor.
5. For continuous 3
rd
level of FV, adjusted information of opening and closing balance andsensitivity analysis of unobservable parameter.No.
6. Assets continuously measured at fair value have switched among different level during the
year.No.
7. Changes of valuation technique and reasons for changes
No.
8. Assets and liability are disclosed at FV rather than measured at FV
No.XI. Related Parties Relationship and Transactions(I) Related parties’ relationship
1. Parent company and ultimate controller
(1) Parent company and ultimate controller
| Parent company | Registered address | Business nature | Registered capital | Shareholding percentage (%) | Voting power percentage (%) |
| Dalian Bingshan Group Co., Ltd. | Dalian | Manufacture | 158,580,000.00 | 20.27 | 20.27 |
Note: Dalian Bingshan Group Co., Ltd. is a Sino –foreign joint venture located No.106 LiaoheEast Road, DDZ, Dalian, China. The legal representative of Dalian Bingshan Group Co., Ltd. isMr. Ji Zhijian, and the registered capital is RMB158.58 million. The registered businessoperation period is from 3rd July 1985 to 2nd July 2035. The business scope include research,development, manufacture, sales, service and installment of refrigeration equipment, coolingand freezing equipment, different size of air-conditioners, petrochemical equipment, electronicand electronic- control products, home electronic appliance, environment protect equipment andetc. (unless the licenses needed)
(2) Change of registered capital of controlling shareholder
| Controlling shareholder | Opening balance | Increase | Decrease | Closing balance |
| Dalian Bingshan Group Co., Ltd. | 158,580,000.00 | 158,580,000.00 |
(3) Change of proportion of controlling shareholder’s shareholding and equity
| Controlling | Shareholding amount | Ratio of shareholding（%） |
| shareholder | Closing balance | Opening balance | Ratio at year end | Ratio at beginning of year |
| Dalian Bingshan Group Co., Ltd. | 170,916,934.00 | 170,916,934.00 | 20.27 | 20.27 |
2. Subsidiaries
Referrer to the content in the Note “VIII. 1. (1) Organization structure of group company”.
3. Affiliated company and joint venture
The information of the affiliated company and joint venture please refers to the note “VIII. 2.(1)The significant affiliated company and joint venture’. The Company had transactions withrelated parties during the current period or last period, including:
| Names of the joint ventures or affiliated company | Relationships with the Company |
| Panasonic Refrigeration (Dalian) Co., Ltd | Affiliated company of the Company |
| Panasonic Cold-chain (Dalian) Co., Ltd | Affiliated company of the Company |
| Panasonic Compressor (Dalian) Co., Ltd | Affiliated company of the Company |
| Dalian Honjo Chemical Co., Ltd | Affiliated company of the Company |
| Keinin-Grand Ocean Thermal Technology (Dalian) Co., Ltd | Affiliated company of the Company |
| Beijing Huashang Bingshan Refrigeration and Air-conditioning Machinery Co., Ltd | Affiliated company of the Company |
| Dalian Fuji Bingshan Vending Machine Co., Ltd | Affiliated company of the Company |
| MHI Bingshan Refrigeration (Dalian) Co.,Ltd. | Affiliated company of the Company |
| Dalian Fuji Bingshan Vending Machine Sales Co., Ltd | Affiliated company of the Company |
| Jiangsu Jingxue Insulation Technology Co.,Ltd | Affiliated company of the Company |
| Dalian Jingxue Freezing Equipment Co., Ltd | Subsidiary of affiliated company |
| Shanghai Jingxue Freezing Equipment Co., Ltd | Subsidiary of affiliated company |
| Panasonic Cold Machine System (Dalian) co., Ltd | Affiliated company of the Company |
| Dalian Bingshan Metal Technology Co.,Ltd | Affiliated company of the Company |
| Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd | Affiliated company of the Company |
| Wuhan Sikafu Power Control Equipment Co., Ltd | Affiliated wholly owned subsidiary of the Company |
4. Other related parties
| Name of related party | Related party relationship |
| Dalian Bingshan Group Refrigeration Equipment Co., Ltd | Affiliated company of Dalian Bingshan Group |
| Dalian Spindle Cooling Towers Co., Ltd | Affiliated company of Dalian Bingshan Group |
| BAC (Dalian) Co., Ltd | Affiliated company of Dalian Bingshan Group |
| Linde Hydrogen Refill Station Equipment(Dalian) Co.,Ltd | Affiliated company of Dalian Bingshan Group |
| Dalian Pate Technology Co.,Ltd | Subsidiary of Dalian Bingshan Group |
| Dalian Bingshan Group Management Consulting Co., Ltd | Subsidiary of Dalian Bingshan Group |
| Alphavita Bio-scientific (Dalian) Co., Ltd. | Subsidiary of Dalian Bingshan Group |
| Dalian Fuji Bingshan Intelligent Control System Co., Ltd. | Affiliated company of Subsidiary of Dalian Bingshan Group |
| Dalian Kaierwen Science Co.,Ltd | Affiliated company of Subsidiary of Dalian Bingshan Group |
| Dalian Bingshan Huigu Development Co., Ltd. | Affiliated company of Subsidiary of Dalian Bingshan Group |
(II) Related Party transactions
1. Purchase of goods, offer and receive labour services etc inter-group transactions
(1) Purchase of goods/receive labour services
| Related party | Content | Current year | Last year |
| Panasonic Cold Machine System (Dalian) co., Ltd | Purchases of goods | 8,212,752.63 | 6,204,102.31 |
| Panasonic Refrigeration (Dalian) Co., Ltd. | Purchases of goods | 5,942,676.17 | 5,734,790.46 |
| BAC (Dalian) Co., Ltd | Purchases of goods | 26,483,606.45 | 38,558,623.38 |
| Panasonic Cold-chain (Dalian) Co., Ltd | Purchases of goods | 8,274,236.08 | 6,771,058.02 |
| Jiangsu Jingxue Insulation Technology Co.,Ltd | Purchases of goods | 34,088,451.31 | 12,637,825.68 |
| Dalian Jingxue Freezing Equipment Co., Ltd | Purchases of goods | - | 31,132.74 |
| Dalian Bingshan Group Refrigeration Equipment Co., Ltd | Purchases of goods | 44,236,639.71 | 25,610,580.45 |
| Dalian Bingshan Huigu Development Co., Ltd. | Purchases of goods | 1,154,661.47 | |
| Dalian Pate Technology Co.,Ltd | Purchases of goods | 4,288,651.47 | 4,424,140.00 |
| Dalian Spindle Cooling Towers Co., Ltd | Purchases of goods | 1,895,034.78 | 3,165,693.81 |
| Panasonic Compressor (Dalian) Co., Ltd | Purchases of goods | 236,234.00 | 239,127.13 |
| Dalian Bingshan Metal Technology Co., Ltd | Purchases of goods | 61,988.75 | 185,173.85 |
| Dalian Fuji Bingshan Vending Machine Co., Ltd | Purchases of goods | 2,018,187.51 | 367,523.32 |
| Related party | Content | Current year | Last year |
| Dalian Fuji Bingshan Vending Machine Sales Co., Ltd | Purchases of goods | 330,309.73 | |
| Dalian Honjo Chemical Co., Ltd | Purchases of goods | 152,920.35 | |
| Dalian Kaierwen Science Co.,Ltd | Purchases of goods | 2,488,250.00 | |
| Dalian Bingshan Group Hua Hui Da Financial Leasing Co, .Ltd | Purchases of goods | 25,898,027.71 | |
| Dalian Bingshan Group | Purchases of goods | 27,471.70 | 9,759.29 |
| Total | 167,605,586.21 | 129,837,558.15 |
(2) Sales of goods/ labour services provision
| Related party | Content | Current year | Last year |
| Panasonic Cold-chain (Dalian) Co., Ltd | Sales of goods | 127,490,433.60 | 93,027,572.31 |
| Panasonic Refrigeration (Dalian) Co., Ltd. | Sales of goods | 43,839,502.05 | 45,338,115.66 |
| Dalian Fuji Bingshan Vending Machine Co., Ltd | Sales of goods | 19,081,218.00 | 18,376,724.10 |
| Panasonic Cold Machine System (Dalian) co., Ltd | Sales of goods | 35,590,082.15 | 30,951,802.17 |
| MHI Bingshan Refrigeration (Dalian) Co., Ltd. | Sales of goods | 16,781,616.57 | 8,338,788.98 |
| Beijing Huashang Bingshan Refrigeration and Air-conditioning Machinery Co., Ltd. | Sales of goods | -41,476.27 | 617,094.02 |
| Panasonic compressor (Dalian) Co., Ltd | Sales of goods | 28,338,724.95 | 5,171,634.65 |
| Dalian Pate Technology Co.,Ltd | Sales of goods | 452,182.08 | 1,318,667.79 |
| Keinin-Grand Ocean Thermal Technology (Dalian) Co., Ltd. | Sales of goods | -309,481.22 | 1,048,376.71 |
| Dalian Fuji Bingshan Vending Machine Sales Co., Ltd | Sales of goods | 94,850.24 | |
| Dalian Jingxue Freezing Equipment Co., Ltd | Sales of goods | 1,099,672.68 | 1,133,622.82 |
| BAC (Dalian) Co., Ltd | Sales of goods | 54,676,218.06 | 37,735,772.48 |
| Dalian Bingshan Group Refrigeration Equipment Co., Ltd | Sales of goods | 3,876,812.87 | 4,876,532.38 |
| Dalian Bingshan Huigu Development Company | Sales of goods | 8,376,384.88 | 9,909,504.28 |
| Related party | Content | Current year | Last year |
| Dalian Bingshan Group Huahuida Financial Leasing Co.,Ltd | Sales of goods | 22,747,787.61 | 38,052,648.77 |
| Dalian Spindle Cooling Towers Co., Ltd | Sales of goods | 7,572,022.06 | 4,561,140.10 |
| Wuhan Sikafu Power Control Equipment Co., Ltd | Sales of goods | 2,831.86 | 817,593.80 |
| Dalian Fuji Bingshan Intelligent Control System Co., Ltd | Sales of goods | 297,951.75 | 205,929.20 |
| Alphavita Bio-scientific (Dalian) Co., Ltd. | Sales of goods | 2,820,207.93 | 1,865,032.81 |
| Linde Hydrogen Refill Station Equipment(Dalian) Co.,Ltd | Sales of goods | 2,097,847.50 | |
| Dalian Bingshan Group | Sales of goods | 139,331.33 | |
| Total | 374,790,539.11 | 303,580,734.60 |
2. Assets Lease
(1) Assets rent out
| Lessor | Lessee | Category of assets rent out | Current year Lease Income | Last year Lease Income |
| Bingshan Refrigeration& Heat Transfer Technologies Co.,Ltd | Dalian Bingshan Group Co., Ltd. | Office | 132,110.09 | 132,110.09 |
| Bingshan Refrigeration& Heat Transfer Technologies Co.,Ltd | MHI Bingshan Refrigeration (Dalian) Co., Ltd. | Plant | 3,809,523.80 | 3,809,523.80 |
| Bingshan Refrigeration& Heat Transfer Technologies Co.,Ltd | Dalian Bingshan Huigu Development Company | Land/property | 8,190,302.14 | 8,190,552.35 |
| Bingshan Refrigeration& Heat Transfer Technologies Co.,Ltd | Panasonic Cold-Chain (Dalian) Co., Ltd | Employee dormitory | 37,577.98 | 39,339.45 |
| Bingshan Refrigeration& Heat Transfer Technologies Co.,Ltd | Panasonic Compressor (Dalian) Co., Ltd | Employee dormitory | 91,428.56 | 114,285.70 |
| Lessor | Lessee | Category of assets rent out | Current year Lease Income | Last year Lease Income |
| Bingshan Refrigeration& Heat Transfer Technologies Co.,Ltd | Panasonic Refrigeration (Dalian) Co., Ltd. | Employee dormitory | 49,321.09 | 63,412.88 |
| Dalian Jingxue Energy Saving Technology Co., Ltd. | Plant and office | 1,005,111.44 | 1,005,111.44 | |
| Wuhan Sikafu Power Control Equipment Co., Ltd | Plant | 308,074.95 | 212,990.08 |
(2) Assets under lease
| Lessor | Lessee | Category of assets rent in | Current year Lease fees | Last year Lease fees |
| Dalian Bingshan Group Huahuida Financial Leasing Co.,Ltd | Bingshan Refrigeration& Heat Transfer Technologies Co.,Ltd | FA | 413,238.94 | |
| Dalian Bingshan Group Huahuida Financial Leasing Co.,Ltd | Dalian Xinminghua Electrical Technology Co., Ltd | FA | 3,722,231.90 | 3,621,571.20 |
| Dalian Bingshan Group Huahuida Financial Leasing Co.,Ltd | Dalian Bingshan JiaDe Automation Co., Ltd. | FA | 418,837.77 | |
| Dalian Bingshan Group Huahuida Financial Leasing Co.,Ltd | Wuhan New World Refrigeration Industry Co. Ltd | FA | 18,339,569.52 | 14,690,379.43 |
| Dalian Bingshan Group Huahuida Financial Leasing Co.,Ltd | Wuhan Lanning Energy Technology Co., Ltd | FA | 24,295.00 | 2,814,560.00 |
3. Warranty provided by Related Parties
The national development fund planned to support the Company’s intelligent and greenequipment of cold chain and service industry base project, and provide the special fund to thecontrolling shareholder of the Company, Bingshan Group. Please refer to the “ Note VI. 32 longterm borrowings”.
4. Funds borrow from /lent to related party
| Name of the related party | Take in/out | Amount | Starting date | Ending date | Explanation |
| Dalian Bingshan Group Co., Ltd. | Take in | 150,000,000.00 | 2016.03.14 | 2026.03.13 | Project fund investment |
| Dalian Bingshan Group Huahuida Financial Leasing Co.,Ltd | Take in | 2,145,251.09 | 2021.06.15 | 2024.05.15 | |
| Dalian Bingshan Group Huahuida Financial Leasing Co.,Ltd | Take in | 18,119,468.87 | 2021.11.15 | 2026.10.15 | |
| Dalian Bingshan Group Huahuida Financial Leasing Co.,Ltd | Take in | 8,619,474.00 | 2021.02.15 | 2023.01.15 | |
| Dalian Bingshan Group Huahuida Financial Leasing Co.,Ltd | Take in | 10,000,000.00 | 2021.06.01 | 2024.05.01 | |
| Dalian Bingshan Group Huahuida Financial Leasing Co.,Ltd | Take in | 5,063,480.54 | 2021.08.15 | 2023.07.15 | |
| Total | 193,947,674.50 |
The national development fund planned to support the Company’s intelligent and greenequipment of cold chain and service industry base project, and provide the special fund to thecontrolling shareholder of the Company, Bingshan Group in 2016. After the above funds are inplace, Bingshan Group will allocate the funds to the Company in full and without any additionalcharge. The above special fund is 0.15 billionYuan in total, the loan interest is fixed interest rateat 1.2% annual rate and paid interest 1,852,000Yuan for this year.
5. Other transactions among the related parties
| Item | transaction | Current year | Last year |
| Dalian Bingshan Group Co.,Ltd | Sold equity of affiliated company | 74,007,700.00 | |
| Dalian Zhonghuida Refrigeration Technology Co., LTD | Purchase equity of affiliated company | 45,400,000.00 | |
| Total | 45,400,000.00 | 74,007,700.00 |
In March 2021, Bingshan Refrigeration& Heat Transfer Technologies Co., Ltd bought 20%shareholding in Dalian Bingshan Group Huahuida Financial Leasing Co.,Ltd from DalianZhonghuida Refrigeration Technology Co., LTD. This share transfer has been approved through15th meeting of the 8th directors’ meeting and announced for related party transaction.
6. Management Remuneration
| Item | Current year | Last year |
| Total remuneration | 3,711,500.00 | 3,792,100.00 |
(III) Balances with Related party
1.Accounts receivable due from related parties
| Item | Related party | Closing Balance | |
| Book Balance | Bad debt Provision | ||
| Accounts receivable | BAC (Dalian) Co., Ltd | 12,548,585.90 | 880,910.73 |
| Accounts receivable | Beijing Huashang Bingshan Refrigeration and Air-conditioning Machinery Co., Ltd | 10,125,260.53 | 6,110,824.22 |
| Accounts receivable | Alphavita Bio-scientific (Dalian) Co., Ltd. | 1,164,159.66 | 81,724.01 |
| Accounts receivable | Dalian Fuji Bingshan Vending Machine Co., Ltd. | 5,656,023.33 | 398,096.17 |
| Accounts receivable | Dalian Bingshan Huigu Development Company | 439,268.00 | 63,813.46 |
| Accounts receivable | Dalian Spindle Cooling Towers Co., Ltd | 1,942,559.40 | 136,367.67 |
| Accounts receivable | MHI Bingshan Refrigeration (Dalian) Co.,Ltd. | 1,803,184.94 | 126,583.58 |
| Accounts receivable | Panasonic Cold Machine System (Dalian) Co., Ltd | 4,963,341.40 | 348,426.57 |
| Accounts receivable | Panasonic Cold Chain (Dalian) Co., Ltd | 37,390,849.92 | 2,624,837.66 |
| Accounts receivable | Panasonic Compressor (Dalian) Co., Ltd | 4,021,698.75 | 282,323.25 |
| Accounts receivable | Panasonic Refrigeration (Dalian) Co., Ltd | 6,861,805.71 | 481,698.76 |
| Accounts receivable | Dalian Fuji Bingshan Intelligent Control System Co., Ltd. | 175,200.00 | 12,299.04 |
| Contract asset | Dalian Bingshan Group Refrigeration Equipment Co., Ltd | 75,000.00 | 12,555.00 |
| Contract asset | Panasonic Refrigeration (Dalian) Co., Ltd | 11,000.00 | 772.20 |
| Contract asset | Panasonic Cold Machine System (Dalian) Co., Ltd | 166,000.00 | 27,788.40 |
| Prepayment | Panasonic Cold Machine System (Dalian) Co., Ltd | 2,225,656.57 | |
| Prepayment | Dalian Bingshan Group Refrigeration Equipment Co., Ltd | 157,531.70 | |
| Prepayment | Dalian Spindle Cooling Towers Co., Ltd | 341,215.00 | - |
| Prepayment | Dalian Bingshan Group Huahuida Financial Leasing Co.,Ltd | 951,659.80 | - |
| Prepayment | BAC (Dalian) Co., Ltd | 1,607,378.00 | |
| Item | Related party | Closing Balance | |
| Book Balance | Bad debt Provision | ||
| Prepayment | Panasonic Refrigeration (Dalian) Co., Ltd | 3,161,000.00 | - |
| Receivable financing | Dalian Fuji Bingshan Vending Machine Co., Ltd. | 2,060,929.41 | - |
| Receivable financing | Panasonic Cold Machine system (Dalian) Co., Ltd | 4,197,610.38 | |
| Receivable financing | Panasonic Cold Chain (Dalian) Co., Ltd | 18,720,000.00 | - |
| Receivable financing | Panasonic Refrigeration (Dalian) Co., Ltd | 242,878.69 | - |
| Receivable financing | BAC (Dalian) Co., Ltd | 7,341,688.27 | |
| Other receivable | Wuhan Sikafu Power Control Equipment Co., Ltd | 148,423.28 | 6,189.25 |
| Other receivable | Panasonic Cold Chain (Dalian) Co., Ltd | 18,079.63 | 753.92 |
(Continued)
| Item | Related party | Opening Balance | |
| Book Balance | Bad debt Provision | ||
| Accounts receivable | BAC (Dalian) Co., Ltd | 9,504,843.22 | 667,239.99 |
| Accounts receivable | Beijing Huashang Bingshan Refrigeration and Air-conditioning Machinery Co., Ltd | 7,240,855.23 | 3,675,419.18 |
| Accounts receivable | Alphavita Bio-scientific (Dalian) Co., Ltd. | 796,179.45 | 55,891.80 |
| Accounts receivable | Dalian Fuji Bingshan Vending Machine Co., Ltd. | 6,782,271.29 | 476,115.44 |
| Accounts receivable | Dalian Spindle Cooling Towers Co., Ltd | 2,099,049.80 | 147,353.30 |
| Accounts receivable | MHI Bingshan Refrigeration (Dalian) Co.,Ltd. | 1,381,832.96 | 97,004.67 |
| Accounts receivable | Panasonic Cold Machine system (Dalian) Co., Ltd | 5,009,806.43 | 351,688.41 |
| Accounts receivable | Panasonic Cold Chain (Dalian) Co., Ltd | 31,200,329.39 | 2,190,263.12 |
| Item | Related party | Opening Balance | |
| Book Balance | Bad debt Provision | ||
| Accounts receivable | Panasonic Compressor (Dalian) Co., Ltd | 170,229.87 | 11,950.14 |
| Accounts receivable | Panasonic Refrigeration (Dalian) Co., Ltd | 10,217,335.97 | 717,256.99 |
| Accounts receivable | Wuhan Sikafu Power Control Equipment Co., Ltd | 36,484.00 | 2,561.18 |
| Accounts receivable | Dalian Fuji Bingshan Intelligent Control System Co., Ltd. | 140,000.00 | 9,828.00 |
| Contract asset | Dalian Bingshan Group Refrigeration Equipment Co., Ltd. | 75,000.00 | 5,265.00 |
| Contract asset | Panasonic Cold Machine system (Dalian) Co., Ltd | 72,500.00 | 5,089.50 |
| Prepayment | Dalian Bingshan Group Refrigeration Equipment Co., Ltd. | 222,875.00 | |
| Prepayment | Panasonic Cold Machine system (Dalian) Co., Ltd | 343,673.53 | |
| Prepayment | Panasonic Cold Chain (Dalian) Co., Ltd | 3,938.00 | |
| Prepayment | Dalian Kaierwen science Co., Ltd | 1,445,000.00 | |
| Prepayment | Dalian Bingshan Huigu Development Co., Ltd. | 114,756.00 | |
| Prepayment | Dalian Spindle Cooling Towers Co., Ltd | 207,390.00 | |
| Prepayment | Jiangsu Jingxue Insulation Technology Co.,Ltd | 6,397,458.41 | |
| Receivable financing | BAC (Dalian) Co., Ltd | 10,501,112.93 | |
| Receivable financing | Dalian Fuji Bingshan Vending Machine Co., Ltd. | 494,341.48 | |
| Receivable financing | Panasonic Cold Machine system (Dalian) Co., Ltd | 6,185,494.14 | |
| Receivable financing | Panasonic Cold Chain (Dalian) Co., Ltd | 16,320,000.00 | |
| Receivable financing | Panasonic Compressor (Dalian) Co., Ltd | 1,025,446.21 | |
| Receivable financing | Panasonic Refrigeration (Dalian) Co., Ltd | 5,049,112.09 | |
| Notes receivable | Panasonic Cold Chain (Dalian) Co., Ltd | 6,400,000.00 | 449,280.00 |
| Notes receivable | Panasonic Refrigeration (Dalian) Co., Ltd | 4,125,319.49 | 289,597.43 |
| Other receivable | Dalian Bingshan Group | 36,263,700.00 | 2,371,645.98 |
2.Accounts Payable due from Related Party
| Item | Related party | Closing Balance | Opening Balance |
| Accounts Payable | BAC Dalian Co., Ltd | 11,326,144.36 | 24,377,268.45 |
| Accounts Payable | Dalian Bingshan Group Refrigeration Equipment Co., Ltd. | 18,626,438.61 | 5,805,008.65 |
| Accounts Payable | Dalian Bingshan Pate Technology Co., Ltd | 3,921,294.33 | 1,988,696.08 |
| Accounts Payable | Dalian Spindle Cooling Towers Co., Ltd | 1,160,849.00 | 695,784.00 |
| Accounts Payable | Jiangsu Jingxue Insulation Technology Co.,Ltd | 4,512,235.92 | 4,542,624.08 |
| Accounts Payable | Dalian Fuji Bingshan Vending Machine Sales Co., Ltd. | 145,500.00 | 414,000.00 |
| Accounts Payable | Panasonic Cold Machine System (Dalian) Co., Ltd | 17,401,521.28 | 14,096,385.66 |
| Accounts Payable | Panasonic Cold Chain (Dalian) Co., Ltd | 187,071.99 | 7,109,782.64 |
| Accounts Payable | Panasonic Compressor (Dalian) Co., Ltd | 1,785,651.94 | 1,805,998.72 |
| Accounts Payable | Panasonic Refrigeration (Dalian) Co., Ltd. | 1,350,094.85 | 1,207,795.95 |
| Accounts Payable | Dalian Bingshan Metal Technology Co., Ltd | 70,047.29 | |
| Accounts Payable | Dalian Kaierwen science Co., Ltd | 128,750.00 | |
| Other payable | Dalian Bingshan Group | 800,000.00 | |
| Other payable | Dalian Fuji Bingshan Vending Machine Co., Ltd. | 268,500.00 | |
| Other payable | MHI Bingshan Refrigeration (Dalian) Co., Ltd. | 170,000.00 | 170,000.00 |
| Other payable | Panasonic Refrigeration (Dalian) Co., Ltd. | 19,500.00 | |
| Other payable | Jiangsu Jingxue Insulation Technology Co.,Ltd | 70,000.00 | 70,000.00 |
| Contract liability | Dalian Spindle Cooling Towers Co., Ltd | - | 1,769,911.50 |
| Contract liability | Panasonic Cold Machine System (Dalian) Co., Ltd | 1,410,975.05 | 10,752,300.88 |
| Contract liability | Panasonic Refrigeration (Dalian) Co., Ltd. | 2,831.86 | |
| Contract liability | Panasonic Cold Chain (Dalian) Co., Ltd | 1,819,735.06 | 87,977.15 |
| Contract liability | Wuhan Sikafu Power Control Equipment Co., Ltd | 76,228.67 | |
| Notes Payable | BAC (Dalian) Co., Ltd | 3,932,858.40 | 869,502.00 |
| Notes Payable | Dalian Bingshan Group Refrigeration Equipment Co., Ltd | 7,377,503.92 | 8,124,711.01 |
| Notes Payable | Dalian Honjo Chemical Co., Ltd | 172,800.00 | |
| Notes Payable | Dalian Bingshan Pate Technology Co., Ltd | 880,000.00 | 1,600,000.00 |
| Item | Related party | Closing Balance | Opening Balance |
| Notes Payable | Jiangsu Jingxue Insulation Technology Co.,Ltd | 492,450.00 | |
| Notes Payable | Panasonic Cold Chain (Dalian) Co., Ltd | 1,657,321.00 | 1,657,321.00 |
| Notes Payable | Dalian Spindle Cooling Towers Co., Ltd | 1,517,200.00 | 150,000.00 |
| Notes Payable | Panasonic Cold Machine System (Dalian) Co., Ltd | 112,010.00 | |
| Lease payable | Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd.. | 4,055,686.70 | 13,545,495.63 |
| Non-current liability due within 1 year | Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd.. | 25,727,284.78 | 14,089,410.56 |
| Long term payable | Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd.. | 23,543,375.62 | 2,022,529.96 |
(IV) Related Party Commitment
No.XII. Share-Based PaymentNoneXIII. ContingencyThe Company sold refrigerating house equipment to Guizhou Pubu Cold Chain FoodInvestment Co.,Ltd (“Pubu Cold Chain”) in the form of finance lease. The Company as a sellersinged finance lease contract with Huahuida as a buyer as well as a lessor and Pubu Cold Chainas a lessee. The contract price is 25.705million Yuan. In case the lease premium is delayed bythe lessee, the Company needs to pay lease premium on behalf of the lessee and be obliged tothe buy back responsibility. Pubu Cold Chain issued an unconditional, irrevocable andjoint liability counter guarantee, and the Company is the beneficiary. Guarantee scope coversthe full liability because of the sales in the form of finance lease.As at 31 December 2021, the balance of the guarantee obligation of the finance lease is RMB24,210,316.00Yuan. There is no situation where the Company needs to bear the liability as thePubu Cold Chain’s default.As at 31 December 2021, The Company does not have any other contingencies for disclosureapart from the above matters.XIV. CommitmentAs at 31 December 2021, The Company does not have any other significant commitments.
XV. Events after the Balance Sheet Date
1. Significant events had not adjusted
The 2nd meeting of the 9th generation of board was held on 21st January 2022 and approved the“ announcement of share transfer of Bingshan Technical Service （Dalian） Co.,Ltd”, and agreeto sell 100% of shareholding of Bingshan Technical Service （Dalian） Co.,Ltd to DalianBingshan Group( Bingshan Group), Dalian Zhonghuida Refrigeration Technology Co., LTD(Zhonghuida), Dalian Zhixintong Enterprise Management Partnership (Limitedpartnership)( Zhixintong) at 25.8882million Yuan.The formal ‘contract of share transfer’ was signed by Bingshan Group, Zhonghuida andZhixintong on March 3, 2022. Change of shareholding has been registered in Industrial andCommercial Bureau.
2. Information about profit distribution
The 4th meeting of the 9th generation of board was held on 22nd April 2022 and approved theprofit distribution policy for the year of 2021, based on 843,212,507.00 numbers of share intotal, paying out cash dividend of 0.1Yuan for every 10 shares (before tax) and cash dividend ofB shares are paid in Hong Kong dollars.
3. Sales Return
There is no significant sales return after the balance sheet date.
4. Except the subsequent event disclosed above, the Company has no other significantsubsequent event.XVI. Other Significant Events
1. Error correction and effect in previous period
No.
2. Debt Restructuring
No.
3. Asset exchange
(1) The exchange of non-monetary assets
No.
(2) The exchange of other assets
No.
4. Annuity Plan
No.
5. Operation termination
No.
6. Segment Information
The management of the Company divided the Company into 3 segments based on thegeographic area: Northeast China, Central China, and East China. The Northeast is theCompany’s general headquarters and the subsidiaries registered in Dalian. The Central is thesubsidiary of the Company, Wuhan New World Refrigeration Industrial Co., Ltd and itssubsidiary, Wuhan Cooling Engineering, Wuhan Lanning, and Chengdu Bingshan. The East isthe subsidiaries of the Company, and they are Ningbo Bingshan Air-conditioning RefrigerationEngineering Co., Ltd.
(1) The basis and accounting policies of reporting segments
The internal organization structure, management requirements and internal report scheme arethe determination basis for the Company to set the operating segments. The segments are thosesatisfied the following requirements.
1).The segment can generates revenue and incur expenses.
2).The management personnel can regularly evaluate the operation results of segments and
allocate resource, assess its performance.
3).The financial situation, operation results, cash flow and other accounting information of
segments can be acquired.The Company confirms the report segments based on the operating segments. The transfer priceamong segments is set base on the market price. The assets and related expenses in common useare allocated to different segments based on their proportion of revenue.
(2)The financial information of reporting segments
Amount unit ：Ten thousands Yuan
| Items | Current year | ||||
| Northeast China | Central China | East China | Offset | Total | |
| 1 Operating income | 256,027.70 | 25,718.92 | 2,053.40 | -74,879.19 | 208,920.83 |
| 2 Cost | 233,714.74 | 22,681.37 | 2,162.77 | -73,605.74 | 184,953.14 |
| Impairment loss on assets | 2,814.40 | 2,175.47 | -11.48 | -15.72 | 4,962.67 |
| Impairment loss on credit | 8,774.42 | 401.39 | -0.28 | -95.73 | 9,079.80 |
| Depreciation and amortization | 9,528.95 | 865.71 | 0.46 | 10,395.12 | |
| Items | Current year | ||||
| Northeast China | Central China | East China | Offset | Total | |
| 3 Investment income from associates and joint venture | -5,805.80 | 1.25 | - | - | -5,804.55 |
| 4 Operating profits(loss) | -20,972.88 | -4,940.69 | -401.00 | -2,634.72 | -28,949.29 |
| 5 Income tax | -1,523.69 | 69.04 | 16.50 | 7.82 | -1,430.33 |
| 6 Net profit(loss) | -19,449.19 | -5,009.73 | -417.50 | -2,642.54 | -27,518.96 |
| 7 Total assets | 645,264.51 | 46,674.73 | 1,205.60 | -119,589.17 | 573,555.67 |
| 8 Total liabilities | 283,157.04 | 33,070.52 | 1,241.14 | -48,861.39 | 268,607.31 |
7. Other important transactions and matters affect the investor's decision
The Company hasn’t had other important transactions and matters affect the investor's decisionin this period.
XVII. Notes to the Main Items of the Financial Statements of Parent Company
1. Accounts receivable
(1) Accounts receivable category
| Item | Closing Balance | |||||
| Booking balance | Provision | Booking value | ||||
| Amount | % | Amount | % | |||
| Accounts receivable with significant individual amount and separate bad debt provision | ||||||
| Accounts receivable with bad debt provision based on the characters of credit risk portfolio | 490,329,366.12 | 100.00 | 81,610,090.34 | 16.64 | 408,719,275.78 | |
| (1) Accounting age as characters | 279,002,384.85 | 56.90 | 81,610,090.34 | 29.25 | 197,392,294.51 | |
| (2) Related party within consolidation scope | 211,326,981.27 | 43.10 | - | - | 211,326,981.27 | |
| Item | Closing Balance | |||||
| Booking balance | Provision | Booking value | ||||
| Amount | % | Amount | % | |||
| Total | 490,329,366.12 | 100.00 | 81,610,090.34 | 16.64 | 408,719,275.78 | |
(Continued)
| Item | Opening Balance | ||||
| Booking balance | Provision | Booking balance | |||
| Amount | % | Amount | % | ||
| Accounts receivable with significant individual amount and separate bad debt provision | |||||
| Accounts receivable with bad debt provision based on the characters of credit risk portfolio | 474,709,875.38 | 100.00 | 66,083,949.47 | 13.92 | 408,625,925.91 |
| (1) Accounting age as characters | 250,449,415.13 | 52.76 | 66,083,949.47 | 26.39 | 184,365,465.66 |
| (2) Related party within consolidation scope | 224,260,460.25 | 47.24 | 224,260,460.25 | ||
| Total | 474,709,875.38 | 100.00 | 66,083,949.47 | 13.92 | 408,625,925.91 |
1) The bad debt provisions of accounts receivable in the portfolio is accrued under
accounting aging analysis method:
| Aging | Closing Balance | ||
| Accounts receivable | Provision for bad debts | (%) | |
| Within 1 year | 134,087,659.57 | 9,412,953.70 | 7.02 |
| 1-2 years | 56,560,751.26 | 9,468,269.76 | 16.74 |
| 2-3 years | 12,732,034.09 | 3,925,286.11 | 30.83 |
| 3-4 years | 24,408,237.52 | 12,040,583.57 | 49.33 |
| 4-5 years | 15,980,988.18 | 11,530,282.97 | 72.15 |
| Over 5 years | 35,232,714.23 | 35,232,714.23 | 100.00 |
| Total | 279,002,384.85 | 81,610,090.34 | — |
(2) Bad debt provision
| Aging | Closing Balance |
| Within 1 year | 289,214,483.23 |
| 1-2 years | 112,760,908.87 |
| 2-3 years | 12,732,034.09 |
| 3-4 years | 24,408,237.52 |
| 4-5 years | 15,980,988.18 |
| Over 5 years | 35,232,714.23 |
| Total | 490,329,366.12 |
(3) Bad debt provision
| Category | Opening balance | Change during the year | Closing Balance | ||
| Accrued | Collected/ reversed | Written-off | |||
| Bad debt provision | 66,083,949.47 | 16,379,650.72 | 269,500.00 | 584,009.85 | 81,610,090.34 |
| Total | 66,083,949.47 | 16,379,650.72 | 269,500.00 | 584,009.85 | 81,610,090.34 |
(4) Accounts receivable written off in current period.
| Item | Written off amount |
| Receivable actually written off | 584,009.85 |
(5) The top five significant accounts receivable categorized by debtors
| Company | Closing Balance | Aging | % of the total AR | Closing Balance of Provision |
| Xinyi Yuanda Construction and Installation Engineering Co., Ltd. | 32,748,744.00 | 4-5years Over 5 years | 6.68 | 25,281,907.38 |
| Qingcheng Zhongyi Energy Co., Ltd | 24,375,000.00 | 1-2years | 4.97 | 4,080,375.00 |
| Xinjiang Dongfang New Energy Co.,Ltd | 10,146,500.00 | Within 1 year | 2.07 | 712,284.30 |
| Guangzhou R&F Properties Co., Ltd | 9,879,861.21 | 3-4years | 2.01 | 4,873,735.53 |
| Ningxia Wangwa Coal Co., Ltd. | 9,131,495.12 | 2-3years 3-4years | 1.86 | 2,533,601.22 |
| Total | 86,281,600.33 | 17.59 | 37,481,903.43 |
2. Other Receivables
| Item | Closing Balance | Opening Balance |
| Interest receivable | 46,879.68 | |
| Dividend receivable | 25,100,920.84 | |
| Other receivable | 29,121,904.34 | 41,136,517.46 |
| Total | 54,222,825.18 | 41,183,397.14 |
2.1 Interest receivable
(1) Interest receivable category
| Item | Closing Balance | Opening Balance |
| Interest on term deposits | 46,879.68 | |
| Total | 46,879.68 |
2.2 Dividend receivable
| Item | Closing Balance | Opening Balance |
| Bingshan Technical Service （Dalian） Co.,Ltd. | 24,148,920.84 | |
| Guotai Junan Securities | 952,000.00 | |
| Total | 25,100,920.84 |
2.3 Other receivable
(1) The category of other receivables
| Items | Closing Balance | Opening Balance |
| Share transfer | 36,263,700.00 | |
| Deposits | 20,112,243.72 | 3,640,939.00 |
| Petty cash | 344,848.03 | 557,035.76 |
| Receivables and payables | 10,466,237.65 | 5,697,595.21 |
| Total | 30,923,329.40 | 46,159,269.97 |
(2) The bad debt provision of other receivable
| bad debt provision | 1st stage | 2nd stage | 3rd stage | Total |
| Expected credit loss within 12 months | Expected credit loss within the whole period(no impairment) | Expected credit loss within the whole period(impairment incurred) | ||
| Opening balance | 5,022,752.51 | - | - | 5,022,752.51 |
| Opening | — | — | — |
| bad debt provision | 1st stage | 2nd stage | 3rd stage | Total |
| Expected credit loss within 12 months | Expected credit loss within the whole period(no impairment) | Expected credit loss within the whole period(impairment incurred) | ||
| balance during the year | ||||
| --transfer to the 2nd stage | ||||
| --transfer to the 3rd stage | 862,625.00 | 862,625.00 | ||
| --reverse to the 2nd stage | ||||
| ----reverse to the 1st stage | ||||
| Accrued | 335,940.00 | 335,940.00 | ||
| Reverse | 1,229,851.45 | 1,229,851.45 | ||
| Cancelation | ||||
| Written off | 2,327,416.00 | - | - | 2,327,416.00 |
| Other movement | ||||
| Closing balance | 602,860.06 | - | 1,198,565.00- | 1,801,425.06 |
(3) Other receivable listed by account aging
| Aging | Closing Balance |
| Within 1 year | 8,184,022.32 |
| 1-2 years | 20,967,321.97 |
| 2-3 years | 573,420.11 |
| 3-4 years | - |
| 4-5 years | - |
| Over 5 years | 1,198,565.00 |
| Total | 30,923,329.40 |
(4) Bad debt provision.
| Category | Opening balance | Change during the year | Closing Balance | ||
| Accrued | Collected/reversed | Written-off | |||
| Bad debt provision | 5,022,752.51 | 893,911.45 | 2,327,416.00 | 1,801,425.06 | |
| Total | 5,022,752.51 | 893,911.45 | 2,327,416.00 | 1,801,425.06 | |
(5) Other receivables from the top 5 debtors
| Name | Category | Closing Balance | Aging | % of the total OR | Closing Balance of Provision |
| Renguo Chemical Co., LTD | Security deposit | 2,000,000.00 | Within 1 year | 6.47 | 83,400.00 |
| China Gas Co., Ltd. | Deposit | 1,100,000.00 | Over5 years, | 3.56 | 1,100,000.00 |
| Xinjiang Dongfang New Energy Co.,Ltd | Security deposit | 1,000,000.00 | Within 1 year | 3.23 | 41,700.00 |
| Chemical Co.,Ltd | Security deposit | 865,980.00 | Within 1 year | 2.80 | 36,111.37 |
| Silicon Material Technology Co., LTD | Security deposit | 800,000.00 | Within 1 year | 2.59 | 33,360.00 |
| Total | 5,765,980.00 | 18.65 | 1,294,571.37 |
3. Long-term equity investments
(1) Category of long-term equity investments
| Item | Closing Balance | Opening Balance | ||||
| Closing Balance | Provision | Book Value | Opening Balance | Provision | Book Value | |
| Investment of subsidiaries | 696,262,267.08 | - | 696,262,267.08 | 687,496,652.08 | 687,496,652.08 | |
| Investment of affiliates and JV | 1,227,131,957.97 | - | 1,227,131,957.97 | 1,504,481,732.65 | 1,504,481,732.65 | |
| Total | 1,923,394,225.05 | - | 1,923,394,225.05 | 2,191,978,384.73 | 2,191,978,384.73 | |
(2) Investments of subsidiaries
| Subsidiaries names | Opening Balance | Increase | Decrease | Closing Balance | Provision for impairment of the current period | at year end |
| Dalian Bingshan Group Construction Co., Ltd | 193,749,675.77 | 193,749,675.77 | ||||
| Dalian Bingshan Group Sales Co., Ltd | 20,722,428.15 | 20,722,428.15 | ||||
| Dalian Bingshan Air-Conditioning Equipment Co., Ltd | 36,506,570.00 | 8,765,615.00 | 45,272,185.00 | |||
| Dalian Bingshan Jiade Automation Co., Ltd | 6,872,117.80 | 6,872,117.80 | ||||
| Dalian Bingshan Lingshe Quick Freezing Equipment Co., Ltd | 59,356,051.19 | 59,356,051.19 | ||||
| Dalian Niweisi LengNuan Technology Co., Ltd | 48,287,589.78 | 48,287,589.78 |
| Subsidiaries names | Opening Balance | Increase | Decrease | Closing Balance | Provision for impairment of the current period | at year end |
| Wuhan New World Refrigeration Industrial Co., Ltd | 184,674,910.81 | 184,674,910.81 | ||||
| Bingshan Technical Service （Dalian） Co.,Ltd. | 22,024,000.00 | 22,024,000.00 | ||||
| Dalian Xinminghua Electronics Co., Ltd. | 43,766,243.72 | 43,766,243.72 | ||||
| Dalian Bingshan International Trading Co., Ltd | 71,537,064.86 | 71,537,064.86 | ||||
| Total | 687,496,652.08 | 8,765,615.00 | 696,262,267.08 |
(3) Joint ventures& affiliated companies
| Investee | Beginning balance | Increase/Decrease | Ending balance | at year end | |||||||
| Increased | Decreased | Gains and losses recognized under the equity method | Adjustment of other comprehensive income | Changes of other equity | Cash bonus or profits announced | Provision for impairment of the current period | Others | ||||
| 1. Affiliated company | |||||||||||
| Panasonic Refrigeration (Dalian) Co., Ltd. | 163,867,472.86 | 147,270,127.38 | -14,994,567.44 | -322,778.04 | - | 1,280,000.00 | - | - | - | ||
| Panasonic Cold-chain (Dalian) Co., Ltd | 205,987,069.49 | - | - | -112,859,182.84 | - | - | 2,797,849.22 | - | - | 90,330,037.43 | |
| Panasonic Compressor (Dalian) Co., Ltd | 462,033,107.31 | - | - | 30,800,342.18 | - | - | 32,773,200.00 | - | - | 460,060,249.49 | |
| Investee | Beginning balance | Increase/Decrease | Ending balance | at year end | |||||||
| Increased | Decreased | Gains and losses recognized under the equity method | Adjustment of other comprehensive income | Changes of other equity | Cash bonus or profits announced | Provision for impairment of the current period | Others | ||||
| Dalian Honjo Chemical Co., Ltd | 8,746,197.03 | - | - | 741,303.19 | - | - | 561,233.70 | - | - | 8,926,266.52 | |
| Keinin-Grand Ocean Thermal Technology (Dalian) Co., Ltd | 55,934,955.38 | - | - | 4,864,112.90 | - | - | 2,000,000.00 | - | - | 58,799,068.28 | |
| Beijing Huashang Bingshan Refrigeration and Air-conditioning Machinery Co., Ltd | 2,121,951.69 | - | - | 17,990.49 | - | - | - | - | - | 2,139,942.18 | |
| Dalian Fuji Bingshan Vending Machine Co., Ltd | 184,454,138.22 | - | - | -35,798,123.47 | - | - | - | - | - | 148,656,014.75 | |
| MHI Bingshan Refrigeration (Dalian) Co., Ltd. | 14,891,119.67 | - | - | 32,684.20 | - | - | - | - | - | 14,923,803.87 | |
| Dalian Bingshan Group Huahuida Financial Leasing Co., Ltd | - | 44,046,635.07 | - | 742,684.48 | - | - | - | - | - | 44,789,319.55 | |
| Dalian Fuji Bingshan Vending Machine Sales Co., Ltd | 43,546.35 | - | - | -43,546.35 | - | - | - | - | - | ||
| Jiangsu Jingxue Insulation Technology Co.,Ltd | 203,208,828.97 | - | - | 14,646,669.36 | - | -16,123,970.29 | - | - | - | 201,731,528.04 | |
| Panasonic Cold Machine System (Dalian) Co., Ltd | 30,034,799.53 | - | - | 2,341,469.67 | - | - | 3,895,484.27 | - | - | 28,480,784.93 | |
| Investee | Beginning balance | Increase/Decrease | Ending balance | at year end | |||||||
| Increased | Decreased | Gains and losses recognized under the equity method | Adjustment of other comprehensive income | Changes of other equity | Cash bonus or profits announced | Provision for impairment of the current period | Others | ||||
| Bingshan Metal Technical Service （Dalian） Co., Ltd. | 173,158,546.15 | - | - | 23,785,030.56 | - | - | 28,648,633.78 | - | - | 168,294,942.93 | |
| Total | 1,504,481,732.65 | 44,046,635.07 | 147,270,127.38 | -85,723,133.07 | -322,778.04 | -16,123,970.29 | 71,956,400.97 | - | - | 1,227,131,957.97 | |
4. Operating revenue and cost
| Item | Current year | Last year | ||
| Revenue | Cost | Revenue | Cost | |
| Revenue from main operation | 785,491,401.27 | 707,799,558.39 | 710,173,991.25 | 589,797,068.56 |
| Revenue from other operation | 48,010,534.28 | 29,323,036.07 | 40,847,679.19 | 26,502,030.35 |
| Total | 833,501,935.55 | 737,122,594.46 | 751,021,670.44 | 616,299,098.91 |
5. Investment income
| Items | Current year | Last year |
| Long-term equity investment gain under equity method | -85,723,133.07 | 79,930,496.36 |
| Gain from disposing long-term equity investment | 27,665,072.62 | 12,859,589.96 |
| Gain from holding of available for sale financial assets | - | |
| Gain from disposal of financial assets available for sale | - | |
| Gain from holding of tradable financial assets | - | |
| Gain from disposing of tradable financial assets | - | |
| Long-term equity investment gain under cost method | 32,102,543.64 | 10,200,459.43 |
| Gain from holding of other noncurrent financial assets | 7,229,604.48 | 5,346,903.12 |
| Gain from disposal of other noncurrent financial assets | 2,620,417.98 | 6,784,485.22 |
| Total | -16,105,494.35 | 115,121,934.09 |
XVIII. Approval of Financial Statements
The parent and consolidated financial statements of the Company were approved by the Boardof Directors of The Company on April 22, 2022.
Supplementary Information to the Financial Statements
1. Non-operating profit or loss
| Items | Current year | Notes |
| Gain or loss from disposal of non-current assets | 27,724,344.91 | |
| Override, no formal approval or accidental tax refund, deduction or exemption | ||
| Government grants recorded into profit or loss during current period | 15,993,001.31 | |
| Expenses for using funds from non-financial institution recognized in current profit/loss | ||
| Gains from acquisition of subsidiary or associates when initial cost is less than the fair value of identifiable net asset of invested company | ||
| Profits/loss from non-monetary assets exchange | ||
| Profits/loss from investments or management of assets entrusted by others | ||
| Assets impairment provision accrued due to force majeure, e.g.: suffering natural disasters | ||
| Profit or loss from debts restructuring | 819,297.68 | |
| Expenses of enterprise restructuring | ||
| Gain/loss on excessive part from the transaction where the trading price is obviously unfair. | ||
| Net gain/loss of subsidiary from combination under same control between the beginning of year and consolidation date. | ||
| Gains/ loss from contingencies arising from the normal business of the Company | ||
| Gain/loss from change of fair value by holding the tradable financial asset and liabilities, and or disposing of the tradable financial asset and liabilities, available for sale financial assets, other than effective hedging in relation to the Company’s normal business | 55,245,024.14 | |
| Reversal of impairment provision of accounts receivable separately tested for impairment | ||
| The profits/loss from external entrusted fund | ||
| The profits/gains from changes of fair value for investment property subsequently measured at fair value model | ||
| Effects of gain/loss from one-off adjustments of gain/loss based on laws and regulations of taxation and accounting. |
| Items | Current year | Notes |
| Custodian fees obtained from entrusted operations | ||
| Non-operating revenue and expense besides the above items | -5,129,941.48 | |
| Other profit or loss | ||
| Subtotal | 94,651,726.56 | |
| Effect on income tax | 8,490,868.44 | |
| Attributable to minority shareholders’ equity (after tax) | 170,754.52 | |
| Total | 85,990,103.60 |
2. Return on equity and earnings per share
In accordance with the provisions of the China Securities Regulatory Commission, “CorporateInformation Disclosure and Compilation Rules for Public Offering of Securities No. 9 –Calculation and Disclosure of Return on Net Assets and Earnings Per Share (2010 Revision)”,the Company’s 2021 annual weighted average net Return on assets, basic earnings per share anddiluted earnings per share are as follows:
| Profit of report period | Weighted average return on net assets (%) | Earnings per share (EPS) | |
| EPS | Diluted EPS | ||
| Net profit attributable to shareholders of parent company | -8.31% | -0.32 | -0.32 |
| Net profit after deducting non-recurring gains and losses attributable to shareholders of parent company | -10.97% | -0.42 | -0.42 |
Section 11 Reference Documents
3. The accounting statements bearing the signatures and seals of the legal representative, thefinancial majordomo and the accountants in charge.
4. The original copy of the auditor's report bearing the seal of the certified public accountants and
the signatures and seals of the certified accountants.
5. The original copies of all the Company's documents and the original copies of the bulletins
published on the newspapers designated by the China Securities Regulatory Commission in thereport period.
6. Time for reference: from Monday to Friday 8:00 - 11:30 (am) 1:00 - 4:30 (pm)Liaison persons: Mr. Song Wenbao，Mrs Du YuTel: 0086-411-87968130Fax: 0086-411-87968125
Bingshan Refrigeration & Heat TransferTechnologies Co., Ltd.
April 23, 2022